

Taxation and class war

Hunting the rich


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Readers' comments


Rob S

Completely missing from the analyses carried out is an attempt to model the response of the rich to avoid paying higher taxes. Yet we do have data on this issue, from both directions.

In the US we have seen a continued INCREASE in the proportion of income taxes paid by the rich when we LOWERED the taxes for the rich. In contrast, Europe has discovered that the contributions from the rich have almost disappeared as they raised brackets. They now look to the US as a role model for progressive taxation. The rich did not disappear, but their taxes did.

On explanation is that rich people have discretion as to how much taxable income they will make. Lower taxes and taxable income becomes more attractive and goes up. Raise taxes and the opposite occurs.

The consequence is that the estimates of returns on higher taxes are likely way off, and might even be negative.

Plumb Bob

We can't really tax the rich that much more and everyone knows why.

Even if taxed at 100% there just are not enough to matter.

The middle class always pays and will again. The rest is just politics.


I agree the wealthy need to pay more tax. Because, for a rich man, after they paid the tax they can still live well, but for a poor, even if they did not pay the tax, they just can barely support themselves. So they have to pay less tax or even do not pay the tax.


The whole Warren avoiding tax thing really gets me. The United States needs some fair way of assigning taxes and one that can be honest. Taxing the upper class more seems to be the only the first of many to come solutions. Taxing the upper class alone wont replace what has been lost, but it is needed.


Corporations have the most cash on their balance sheets in a long time. We don't need cuts on capital gains, and we don't need lower taxes to induce investments. We need people to have more money so they can go and spend it (buy things that the rich own or get part of their profit from), but it is hard to purchase anything when there is no money for the poor and middle class. Aggregate supply is to big for aggregate demand. Aggregate demand is made up from middle class and the poor not from the rich. At this point we need to tax the rich by a lot more, if we want to balance the economy and move ahead with 2 nominal GDP growth. Forget the 4-5% for now.


This really depends on where the cut off as "rich" is. Wasn't there that statistic that said, 70% of federal income tax came from top rich 10% of the people? The small business owner making $150,000-$1,000,000 should not be taxed any more than they are now. The super rich on the other hand, (millions and millions of dollars, top 10% of people) could be taxed more, and it wouldn't hurt as much or as many people. But to be honest, anything near 40-50% tax rate is too much no matter how rich.


The U.S. would not be in its present predicament if 1. The government had not so twisted the housing market to force bad loans; 2. If the government had not increased spending tremendously with the prescription and Obamacare bills; and 3. If the government had not bailed out failed businesses with the ~two trillion in stimulus spending.
We were in good shape during and immediately after the Clinton gridlock years where government was stopped from massive new spending and massive tax increases by arguments between the Dem executive and GOP legislature. This gave business a stable environment which led to the confidence to expand.
So I will not support an increase in taxes on the rich (I am not rich by the way) until I see real reductions in spending first. Otherwise the extra income would only cause more spending by either party.
As for Europe, while I have not studied the economies over there extensively, it seems their problems are on the same level as the U.S. only more so in many cases. Too much spending by politicians on vote buying and bloated bureaucracies accompanied by ever more intrusion in the private sector has done much to stagnate the economies of Europe.

T. Sombrero

What's with all the straw-man arguments from the right? Raising the top marginal rate from 36% to 40% is tyranny? Socialism? Taxing the rich until they have nothing left? Forced equality? Give me a break! Absolute nonsense!

I come to this site because it's one of the last comment boards with thoughtful commentary, but I see the trolls have discovered it and that makes me sad.

The Wall

The rich paying heavier taxes is an unfair process but it is the only way we can keep this economy afloat. Without this extra revenue for the government then our national debt will plunge even further. Spending cuts along with higher taxes will lead to the national debt greatly decreasing. Our exports are the real problem here and if we would increase our exports then we would not have to raise taxes. Our imports far outweigh our exports and until this is fixed we will never get out of debt. You can tax the rich until they run out of money and then what will we do? Higher taxes are not the answer only a temporary solution.


Personally, I belief that the rich absolutely should not be required to bear the burden of increased taxes. Despite what Mr. Obama states it is indeed class warfare. Furthermore, it is not the most efficient way to go about solving the current economic problems in America. Typically, the upper class in America invest the most with their money and put the most back into the economy. If the rich become taxed,they will be left with less money, they will feel less safe in their investments,and they will put less money back into our economy and to even pull money out. Mr. Obama has a chip on his shoulder and an irrational outlook on the rich and class system. He is solving nothing and instead is initiating class warfare.


I definitely believe that tax deductions are clearly hurting the economy more than helping it. The wealthy should be caring a larger load of the tax burden, although not all of it. I definitely believe that by making the tax code more efficient, the tax deficit will be recovered without further conflicts among the differing classes.


Taxing the rich indeed is not going to make the economy and better. Cuts need to be made in other areas as well. Most of them, sadly, will affect people of all ages: Enrichment program funds would be cut, Social security benefits may reduce, etc. I do believe, however, that the the wealthier citizens should have their taxes raise and help resolve the nations' budget problems. They use up more of their countries' energy (energy has to be paid for). In addition, tax breaks given to lucrative companies makes the gap between the rich and middle class extremely big, which is not favorable in a down economy.

20% of the budget goes to defense. When the country goes to war, everyone is defending, but it is the rich who get the ultimate benefit because they have more property to defend! Therefore, they should be chipping in more taxes / money into the economy.


This article gives great insight into how to hopefully solve our tax/deficit problem. Simply taxing the rich more is wrong and unfair, but the fact that Warren Buffet pays a lower average tax rate than his secretary is also unfair. What our government needs to do is simplify the tax system and get rid of the loopholes that allow the rich to pay a lower tax percentage. Everyone should pay the same percentage in tax, plain and simple.


No one likes taxes, but raising them is a harsh reality Americans are going to have to face if we plan on closing our budget deficit at all. If the rich must be targeted so be it, I think. I don't believe it's "class warfare". It's just a sacrifice the rich are going to have to make for the good of our country. They won't feel an increase in taxes as much as folks with smaller incomes.

Samantha Zaboli

I think that because of the dire state of most economies now in western Europe, the EU should definitely enforce a higher tax on its people to bail out the failing economies such as Greece. Britain is one of the leading thinkers in banking and they have very good ideas about budgets and the like. The U.S. should take notes and I agree that instead of putting a cap or margin on something a whole new tax code should be instated. Personally I think that a proportionate tax increase in relation to income would be much more efficient. In Virginia the highest tax bracket is given to those who make more than $17,000 a year. For those in most northern parts of Virginia that is considered a very low income to support a family of four. I think another great idea that was proposed in this article is the "mansion tax". I think putting a higher property tax rather than income would be a better way of doing it, so that it is not to seem as "class warfare".


fairly balanced article. To all who think the rich are not paying enough, the best place is North Korea.

What we really need is, transparency at top, make sure the government not using the tax payer money to bail out rich people who fail (GM anyone?), we need fiduciary laws to make sure CEO who screw stock holder interest so he can have the big boat be strip out all his stuff and when his company fail. Need to make sure we the voter have a say in how much government officials make (and their pension). Work a day and have a million dollar pension? That is class warfare, the special class vs tax payer class.

Dave Truslow

Why is there such a big revenue crisis in the USA? Could it be that the top1% of taxpayers, who control 42% of the wealth and who make 25% of the total personal income earned each year in America, spend a lot of that money to make sure they don’t have to pay for the privilege? That is; paying their fair share of taxes. After all, it is the USA’s democratic, capitalistic, free market system and its governments’ institutions and investments in infrastructure, education and research that makes it possible for the 1,399,606 Americans (in 2008) to earn this kind of wealth.

This top 1% of rich and super-rich taxpayers point out they pay 30.8% of their income in Federal, State, and local taxes (just think of the property taxes alone), and 38% of all Federal income tax collected. They plead that they are paying more than their fair share. However, the next 99 out of 100 taxpayers, on average, earn only 75¢ for every $25 the top 1 earns. Put another way; when we make our first dollar the top 1% makes their first $3,267.

According to the IRS (in 2008) the adjusted gross income (AGI) of the top 1% was 20% of the total taxable income, i.e. the top 1 percent had tax breaks totaling much more than 1/5 of their income considering how many below them don’t even earn enough AGI to be taxable (about 50.7% of returns paid no income taxes in 2008). On average the top one out of each 100 taxpayers earns a taxable income of $1,204,247, while the next 99 earn just $46,651 each of taxable income. In AGI terms the top 1 earns 25.8 times more taxable income than each of the next 99. Put another way; when we work our first 10 days the top 1 % receives more income than the rest of us will earn all year.

The effective Federal tax rate on the top 1% was 23.2% while the effective Federal tax rate on the next 99% was 9.48%. So while the top 1% makes 25.8 times more taxable money than what each one of the next 99% makes, they only pay 2 ½ times more in taxes. Is this class warfare? Is this fair? Is this the American Dream?

The late George Carlin, the outspoken and controversial comedian and modern day philosopher, said it best:


The Bush tax cuts have been in place for nine years and the official unemployment rate just dropped to 9.1%. Does anybody still believe cutting taxes on the rich and super-rich creates jobs? And by the way, it is demand for goods and services that creates jobs not “job creators”. The job creators hire more people to fill new demand. It’s true that taxing job creators does not increase demand, but spending that increased revenue on projects that improve America’s future does. History shows no matter how much we’ve taxed the job creators they still create jobs if there is demand. It just means smaller profits but profits none the less.

The AGI of the bottom 50% of taxpayers is only $15,354 on average. So, the next time you hear somebody say 51% of Americans don’t even pay taxes, I want you to reply: “You mean 51% of Americans don’t even make enough money to be in the lowest tax bracket; what’s wrong with this picture?”



I completely agree with the author in his views of that the tax code should become more simpler instead of just adding more and more taxes. I would also want to see what would happen if we adopted some of Europe's tax's codes such as the "mansion tax" and other things. Since America has so many mansions, That would generate a lot of money, but it could hurt our economy by having the rich take less risks, like the author said.


While I generally disagree with your supporting philosophy, I am entirely in favor of a simplified US tax code that eliminates most shelters. I'd be interested in hearing someone else's analysis of this proposal and if satisfied I would encourage my representatives to support such a plan. Even though it would hurt me pretty badly, I say the US should gradually phase out the mortgage deduction, too.

I'd support eliminating corporate income tax as long as it is paired with the tax simplification you describe, AND corporations also lose their status as legal entities, becoming limited liability companies. I realize this has wide-reaching implications and I'm completely fine with them, frankly.

My theory is part of the cause of the disappearing middle class in the US is the theory of trickle-down economics doesn't take into account loss aversion by wealthy Americans - they believe that as soon as Democrats get into office that they'll raise taxes, so I think they must squirrel away as much money as possible, and it doesn't actually get invested at the level it should.


"High marginal tax rates discourage entrepreneurship, and no matter how much Mr Obama mentions 'millionaires and billionaires', higher taxes on them alone cannot close America’s deficit."

This one sentence alone can sum up my fear against higher taxes on the wealthy. Although at first glance of the proposal to tax the rich seems justifiable, it is the fear of what the consequence/effect may be. Raising the taxes, which seems like a punishment in itself, may lead to the wealthy questioning why did they work so hard to try to fulfill the American dream? Isn't entrepreneurship and the opportunity to start and create something new exactly what America promises possible? A land of opportunities. Well personally I find those opportunities for entrepreneurship to be combated by the possibility of higher taxes. If the wealthy are taxed higher due to their prosperity, then what's left to motivate an aspirer to reach that status?


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