A common right-wing rejoinder to the leftist claim that the rich don’t pay their fair share of taxes is that “The top 1% of earners in this country pay 34% of all taxes.” I’ve heard Rush pull this one out on a liberal caller, and I recently saw a TV show purporting to uncover “10 Popular Myths” use the same stat to convince people that the wealthy pay too much tax.
But doesn’t the statistic make a logic error by comparing the size of a group in population terms (1%) with the proportion of taxes they pay? Shouldn’t we instead compare the size of the group’s wealth with the proportion of their taxes?
According to taxfoundation.org, the top 25% of all earners earn 65% of the nation’s income. And the top 1%? They hold around 21% of all the wealth.
Of course, our system of terraced tax brackets does mean that wealthy people do pay more per dollar on their income taxes — they hold 21% of the wealth but pay 34% of the taxes. Whether they should pay more per dollar or not is a separate question — one that cuts to quick of any socialist vs. libertarian debate (and don’t forget that the wealthy also have access to any number of tax shelters that your average wage earner does not).
The point is that the statistic gets thrown around with an unspoken implication: That the top 1% should pay 1% of the taxes. If Rush and co. want to make this form of argument, they should be arguing that those controlling 21% of the wealth are paying 34% of the taxes. But that argument wouldn’t have nearly the same impact.
One also often hears the accompanying argument that the threshold for entry into the 1% club is not high — you “only” have to make around $300,000 to join the 1% club. While true, this stat ignores the fact that many of the top earners are actually wealthy beyond almost anyone’s dreams. “In 1999, 268 of the [top] 400 [earners] qualified as billionaires.”