Tax 'facts' that wouldn't fool a fifth-grader

Setting the record straight on income, taxes, rich and poor

March 28, 2012|Dan Rodricks

The shad, America's founding fish, has started its annual run up the Chesapeake Bay and into the Susquehanna River, and here in Maryland, Land of Pleasant Living, there's been a run of foolish facts, too. My email box has been full of them lately, a sudden spring run stirred to life by recent columns on Maryland's many millionaires and the wild idea that they should pay income taxes at a higher rate than the rest of us.

"Your commentary this morning helps me understand why our country is in such a dire situation," began one of several letters I received about Sunday's column on the well-off's cranky attitude toward taxes. The writer's name was Steve, a self-described conservative and "ashamed" Democrat.

"Let me explain this in a way even a fifth grader can understand," he wrote.

"Let's take a block of 20 houses. In 10 of the houses hard-working, successful families pay their taxes in a progressive manner. In two of the houses live people that truly need help. They are the elderly, disabled and hard-working-but-temporarily-down-on-their-luck.

"In the other eight houses are people that do not work, do not try to work, and have been conditioned to depend on the government for their funding.

"This is roughly where we are now in this country — the hard-working and well-off have no problem paying for the two houses of elderly and down-on-their-luck. The problem is paying for those living the liberal dream of cradle-to-grave government assistance."

So Steve's snapshot of America has 50 percent of the country working and paying taxes, while 10 percent are the deserving needy and a whopping 40 percent are lazy welfare recipients.

This is what we call "foolish facts," a figment of the conservative imagination.

I checked Steve's "math" with Michael Reisch, professor at the University of Maryland School of Social Work and an expert in the nation's social welfare apparatus and funding.

"Absurd," Mr. Reisch said of Steve's 40 percent freeloader category. "The number of persons receiving welfare (Temporary Assistance for Needy Families) has been dramatically slashed since 1996. It's now just over seven million persons — or less than three percent of the population — and 70 percent of the persons receiving TANF are dependent children. That leaves a little over two million adults on welfare. Even if all of these adults were 'freeloaders,' they constitute less than one percent of the population."

So, Steve's math was just a bit off — by maybe 39 percent.

He suffers from an impression of the American welfare state that is way out of date and was never as bad as critics claimed. He also sees it as part of a political plot: "The liberal Democratic way of controlling people."

Of course, Steve is also a defender of the right of the rich to keep even more of their money.

"The top 10 percent pay 70 percent of the income taxes in this country already," he said, using a phrase from a much-quoted study by the Heritage Foundation. "When is it progressive enough for you, Dan? ... It is a mathematical fact that the liberal feel-good policies and spinning cannot erase. Dan, are you smarter than a fifth grader?"

I went over this last August. Republican presidential candidates were saying that more Americans should pay income taxes, so I looked into it.

Sure enough, according to the nonpartisan Tax Policy Center in Washington, about 46 percent of American "tax units" won't have to pay federal taxes on 2011 income. But for good reasons: They are poor, long-term unemployed, working poor with children, students or senior citizens living on benefits. So they get a break. They do, however, pay plenty of other taxes: payroll taxes, state and local income taxes, sales taxes, property taxes.

As for the Heritage Foundation's assertion that the top 1 percent of income earners pay a disproportionate share of federal income taxes, there's good reason for that, Steverino: They have most of the money, and they keep getting more. A study this month from economist Emmanuel Saez at the University of California, Berkeley, shows that in 2010, income for the nation's top 1 percent grew by 11.6 percent, while for the bottom 99 percent it grew only by 0.2 percent. The rich got richer — way richer. They should pay more in taxes and quit bellyaching. Even a fifth-grader would see that.

Dan Rodricks' column appears Tuesdays, Thursdays and Sundays. He is the host of "Midday" on WYPR-FM, 88.1. His email is

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