Fun With Numbers And Tax Rates

Many conservative blogs are getting excited over data which shows that the federal income taxes paid by the top 1% has passed that paid by the bottom 95%. It is curious that they ignore a significant amount of tax revenue between the 95th and top one percentile, presumably because this gives them the appearance of reaching a meaningful milestone. Of course the only way that the top1% can be paying comparatively more in taxes despite recent tax cuts is that we have even greater income disparity than in the past.

Besides ignoring a significant chunk of tax payers, these numbers have limited meaning as they ignore payroll taxes along with a number of other regressive taxes. Payroll taxes represent a greater share of taxes than the income tax for many workers. On the other hand, just as conservative claims that the rich pay too high a share need to be taken with a grain of salt, progressive complaints about the payroll tax also ignore an important aspect of the tax.

Payroll taxes for Medicare are collected on all income levels but payroll taxes for Social Security are collected on the first $106,800 (which rises annually). That might seem unfair at first glance but it actually makes sense as Social Security benefits are also calculated based upon only replacing such income. While the taxes are calculated to somewhat benefit lower income workers over higher income workers there is a serious danger in making them even more progressive. If higher income earners had to pay taxes on all income but only received benefits based upon lower levels of income Social Security would turn into more of a welfare program and those making over $106,800 would see it as a very bad deal.  The system now receives broad based support (except from the far right) as everyone receives comparable benefits. If the system were to penalize high income earners we would likely see erosion of support, which would ultimately place those with lower incomes who are more dependent upon Social Security at risk.

There is plenty of room for debate as to what appropriate tax levels are. Unfortunately there is also a lot of room to confuse the issue when looking at tax rates.

Posted in Economy. Tags: , . 9 Comments »

E-Mail Shows Rove Had Greater Role in Firing of Prosecutors Than He Admits

Karl Rove claims he only had a small role in the firing of federal prosecutors. E-mail and other documents show otherwise, as reported by The Washington Post:

Political adviser Karl Rove and other high-ranking figures in the Bush White House played a greater role than previously understood in the firing of federal prosecutors almost three years ago, according to e-mails obtained by The Washington Post, in a scandal that led to mass Justice Department resignations and an ongoing criminal probe…

The role of Bush in the dismissals gets occasional mention in the e-mails and other documents. The Justice Department inspector general’s report said that Bush and Rove talked with Alberto R. Gonzales, then the attorney general, in October 2006 about voting fraud, including problems in New Mexico. And in an e-mail in mid-November 2006, as the firing plan accelerated, Gonzales’s chief of staff, D. Kyle Sampson, asked lawyers at the White House, “Who will determine whether this requires the President’s attention.”

Posted in George Bush, Scandals. Tags: . No Comments »