Friday, September 23, 2011

Krugman on real class warfare

With Obama's jobs package calling for modest tax increases on the wealthy the conservatives are crying "class warfare." They are right but its not as they intend. One of their main strategies in such matters is to acknowledge an actual phenomenon but twist it around to its opposite. But this is a losing battle for them, as even the dumbest of Americans is on to this bullshit projection. Paul Krugman says it best so check out his article. A few excerpts:

"As background, it helps to know what has been happening to incomes over the past three decades. Detailed estimates from the Congressional Budget that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21 percent....
Meanwhile, over the same period, the income of the very rich, the top 100th of 1 percent of the income distribution, rose by 480 percent...So do the wealthy look to you like the victims of class warfare?

"The budget office’s numbers show that the federal tax burden has fallen for all income classes, which itself runs counter to the rhetoric you hear from the usual suspects. But that burden has fallen much more, as a percentage of income, for the wealthy. Partly this reflects big cuts in top income tax rates, but, beyond that, there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.

"And one consequence of the shift of taxation away from wealth and toward work is the creation of many situations in which — just as Warren Buffett and Mr. Obama say — people with multimillion-dollar incomes, who typically derive much of that income from capital gains and other sources that face low taxes, end up paying a lower overall tax rate than middle-class workers. And we’re not talking about a few exceptional cases.According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class."

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