Steyn Ignores Record-High Wealth Of Top 1 Percent To Push Tax Break For Wealthy
On Fox News, conservative commentator Mark Steyn claimed that “when you don't take” money from the richest 1 percent of taxpayers, they “hire people, they invest.” But Steyn ignored the fact that the top 1 percent of earners have seen their earnings skyrocket in the past 10 years -- in part due to historically low tax burdens -- and yet hiring remains low.
Steyn Claims Richest 1 Percent Will “Hire People [And] Invest” If “You Don't Take Their Money”
Steyn: “What Do The Richest 1 Percent Do When You Don't Take Their Money? They Hire People, They Invest.” On the October 20 edition of Fox News' Fox & Friends, co-host Brian Kilmeade interviewed his guest, conservative commentator Mark Steyn, about the Occupy Wall Street movement and a recent list of their demands. When Kilmeade mentioned “increasing taxes ... on the richest 1 percent of the country,” Steyn replied that they “already pay enough taxes” and continued by saying that if “you don't take their money,” the richest 1 percent will “hire people [and] invest.” From the show:
KILMEADE: Right. Listen to some of their other demands. Halt foreclosures for unemployed, sick and elderly. Forgive all student loans as you mentioned. Reinstate Glass-Steagall. And what about increasing taxes -- have we heard this before -- on the richest 1 percent of the country?
STEYN: Yeah, the richest 1 percent already pay enough taxes. What do the richest 1 percent do when you don't take their money? They hire people, they invest. Even if they just go to the local convenience store and buy a crate of beer, they're still putting that money out into the productive economy. [Fox News, Fox & Friends, 10/20/11]
But Wealth, Income Of Top 1 Percent Are At Record Highs ...
CEPR Report Shows Income Of Top 1 Percent Increased 256 Percent From 1979-2006, While Lowest Quintile Saw Incomes Rise 11 Percent. From a December 2010 report released by the Center for Economic and Policy Research (CEPR):
[CEPR, December 2010]
Vanity Fair: “Upper 1 Percent” Take In “Nearly A Quarter Of The Nation's Income” As Compared To “12 Percent” 25 Years Ago. From a May 2011 Vanity Fair article by Nobel Laureate economist Joseph Stiglitz:
It's no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous -- 12 percent in the last quarter-century alone. All the growth in recent decades -- and more -- has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow. [Vanity Fair, May 2011, emphasis added]
Huffington Post: “For 2007 ... The Top One Percent Of Earners ... Enjoyed A 6.8 Percent Growth” In Income, “Versus The 3.7 Percent Average” In The U.S. In a March 2010 article titled, “Number of U.S. Millionaires Soared In 2009: Spectrem Group,” The Huffington Post wrote:
Of course, household incomes have been growing unevenly for years -- even during times of seeming prosperity. For 2007, the year for which the most recent data is available, the top one percent of earners -- those with incomes of at least $398,000 per year -- enjoyed a 6.8 percent growth (versus the 3.7 percent average), boosting their share of the country's total income to 23.5 percent. [The Huffington Post, 3/9/10]
... While Taxes On The Wealthiest Are At Historic Lows ...
CBPP: “The Effective Federal Income Tax Rate For The 400 Taxpayers With The Very Highest Incomes Has Declined By Nearly Half Over The Past Two Decades.” A report from February 23, 2010, from the Center on Budget and Policy Priorities (CBPP) found:
The effective federal income tax rate for the 400 taxpayers with the very highest incomes has declined by nearly half over the past two decades, even as their pre-tax incomes have grown five times larger, new IRS data show.
The top 400 households paid 16.6 percent of their income in federal individual income taxes in 2007, down from 30 percent in 1995. This decline works out to a tax cut of $46 million per filer in 2007, or a total of $18 billion in tax cuts for these households per year.
To make it into the top 400, a household needed an adjusted gross income of at least $35 million in 1992 (in 2007 dollars) and $139 million in 2007.
The decline in effective tax rates at the very top is due in large part to the capital gains tax cuts enacted in 1997 and 2003. The top marginal tax rate on capital gains is now 15 percent, less than half the top tax rate on wages and salaries. The top 400 taxpayers derived two-thirds of their income from capital gains and qualified dividends in 2007.
The report included the following chart, showing federal income tax rates for millionaire households as well as the top 400 households:
Bloomberg Businessweek: “Except For A Period From 1988 To 1992, The Top Tax Rate Has Never Been This Low Since 1931.” A December 15, 2010, Bloomberg Businessweek article stated that Congress's pending renewal of the Bush tax cuts would create “an environment in which their tax rates on income and investments remain at historic lows.” From the article:
A bonanza of new and extended tax benefits could make it as easy as ever for the rich to stay that way.
Under legislation approved by the U.S. Senate on Wednesday, Dec. 15, and now moving on to the House, savvy wealthy Americans would be able to capitalize on an environment in which their tax rates on income and investments remain at historic lows. Also, new rules would make it possible to pass on fortunes to heirs with less fuss and lower taxes than all but a brief period of the past 80 years. It's a far cry from the 70 percent bite the federal government took out of the largest incomes and estates as recently as 1980.
“The climate we'll have after this legislation is extremely favorable for wealthy families,” says Jeffrey Cooper, a professor at Quinnipiac University School of Law and a former estate planner who has studied the history of U.S. tax law.
The good news for the rich starts with income tax rates, which for top income groups would remain 35 percent , a rate enacted by former President George W. Bush in 2003. Except for a period from 1988 to 1992, the top tax rate has never been this low since 1931.
“Top rates are incredibly low from a historical perspective,” says Indiana University law professor Ajay Mehrotra. The most surprising thing, he says, is that rates have remained at this level even as the U.S. has been fighting two wars, in Afghanistan and Iraq. Historically, income taxes on the wealthy have spiked during wartime: The first income tax was initiated during the Civil War and then later repealed. The top rate on income hit 77 percent in 1918, during World War I, and 94 percent from 1944 to 1945, during World War II. [Bloomberg Businessweek, 12/15/10]
... Yet Hiring Remains Slow
USA Today: “Top Employers Are Adding Very Slowly To Their Rolls.” An April 5 USA Today article noted that while “the Great Recession has faded like a bad dream for U.S. companies” on “most measures,” the increases in jobs “have been painfully slow.” From the article:
The economic recovery is 2 years old. Corporate America is thriving again. But “for hire” signs at the USA's biggest companies are surprisingly scarce.
By most measures, the Great Recession has faded like a bad dream for U.S. companies. Profits at the Standard & Poor's 500 big companies are expected to jump 15% this year to record levels, on top of a 47% jump last year.
Shareholders are reaping the benefits, with stock prices almost doubling since the 2009 low and companies adding a 7% dividend kicker in 2010. And companies spent $299 billion buying back their own stock last year, a record 117% jump from 2009.
Yet all that financial fanfare hasn't translated into a big windfall for people looking for work at the country's largest companies. While jobs overall are up -- the 8.8% unemployment rate in March was down from 9.8% in November 2010 and the peak of 10.1% in October 2009 -- the increases in head counts have been painfully slow.
•Top employers are adding very slowly to their rolls. Large companies, which employ nearly 18 million people, added 3.2% more net jobs last year, based on a USA TODAY analysis of the 444 S&P 500 companies that have reported employee statistics for 2010 and 2009 collected by S&P's Capital IQ. That's a net increase of just 557,000 jobs from the nation's largest employers -- only about a fourth as many people as work for Wal-Mart alone.
•A number of large firms are not adding to their net workforce at all. It's not just the anemic job growth, but the reluctance of many large companies to hire at all. Of the 444 companies with valid head count data, just 246 have increased their employee head count 1% or more. More than a third of those 444 companies ended 2010 with fewer people than they started the year with.
•Some industries are still shrinking. Two of the 10 industry sectors tracked by S&P -- telecommunications and utilities -- reduced their employee head counts in 2010. [USA Today, 4/5/11, emphasis original]
NY Times: “Most Analysts Do Not Believe That The Country Will Slide Back Into A Recession” But They Acknowledge “Low Levels Of Hiring.” A June 3 New York Times article stated, “While most analysts do not believe that the country will slide back into a recession -- which would technically mean that the economy would start shrinking again -- they acknowledge that with such low levels of hiring, the recovery is barely perceptible to many Americans.” The article included this graphic showing the change in the number of jobs in 2009 and 2010:
[The New York Times, 6/3/11]