Last Week: AP Whitewashes Tax Inequity, And Rick Perry Becomes The GOP Pinata

By Manifesto Joe

Last week brought good news and bad. The bad news is that The Associated Press did one of their imbecilic "fact checks" on the question of unfair taxation in America, and their whitewash was widely disseminated by the Mainstream Media. They were fundamentally inaccurate on many points.

Thank God for Citizens for Tax Justice. CTJ analyzed the AP data and pretty thoroughly nailed where they went wrong.

The issue became a media focus point after President Obama proposed a deficit reduction plan that included a minimum tax on the rich. So, here's where AP went with this, excerpted from the CTJ review:

"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said Monday. "That's pretty straightforward. It's hard to argue against that."

The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

If that's what you get from "the data," AP doesn't do a good job of showing it. The piece points out early on that about 1,400 millionaires paid no income tax at all -- that's a small number of tax avoiders, they explain, though clearly this would be part of what Obama is talking about.

But then they zero in on what seems to be their best case:

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.

Well, that sounds like a slam dunk, right? The rich pay twice as much as middle class earners. Or maybe not: Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. (The emphasis is mine. -- MJ) The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.

So what if much of a really wealthy person's income is investment income? AP doesn't get into that; it moves on to discussing the fact that a lot of poor people pay no income tax.

Here's a link to the entire CTJ article.

One of the most pernicious mantras of the right wing is the alleged "liberal bias" of the MSM. There might have been some case for this to have been made 25 or more years ago, when Dan Rather was king at CBS and AIM was in its infancy. What appears to have happened is that the death of the Fairness Doctrine, plus a quarter-century of corporate whippings, scattered most of the hard-hitting, independent journalists. Apparently, what's mostly left are miserable corporate shills such as those who concocted this AP whitewash on U.S. taxation.

There were more problems. The AP focused on the top 10% of earners paying an estimated 70% of federal income taxes. I haven't had time to check this for accuracy, but presuming that it's true -- it's not the top 10% who are the main problem here. It's more like the top 1%, the superrich.

Not only did the AP "analysis" not account at all for the lower rates on investment income and capital gains, it didn't examine the shelters and breaks that go only to the very highest "earners."

Nor did the "analysis" discuss the corporate income tax, which in 1959 accounted for 39% of all federal income tax revenue, according to the IRS. We're a long, long way from those days. By 1989, the IRS corporate take was down to 17%, according to the agency itself. And last year, two-thirds of U.S. corporations paid no income tax at all, and some like ExxonMobil even got vast refunds.

It's a common fact that while wages and salaries stagnated over the past 30 years in real dollars, the U.S. economy roughly doubled in size. So, if ordinary schmucks saw no gains from their greater productivity during that time, who made off with all that loot?

Now the good news: Governor Goodhair as pinata

Sorry, Spanish purists, but I couldn't figure out how to make an "n" with a tilde work on Blogger.

It's a bit heartening to know that people in other parts of the U.S. are beginning to figure out what some Texans have known for a very long time -- that Rick Perry is a lightweight among lightweights. His vapid, stammering performance at last week's Republican presidential debate was ample evidence. The other GOP "contenders" suddenly realize that there's a papier-mache figure there, just waiting for a blindfolded rival to rip him open with a stick so that the candy will come pouring out.

And that economic miracle that Goodhair keeps touting is about that fragile, too. Analysts are seeing that most of the state's revenue comes from two sources: federal funding, and sales tax. None of this looks good for Goodhair, a neo-secessionist who's eternally railing about federal interference and high taxes. Want to guess who bears the biggest burden of sales taxes? (Hint: It's known as a "regressive" tax.)

And then, property taxes, which tend to hit the middle class hardest, are the crucial revenue source at the local level in Texas.

All this, so that Goodhair can spread 'em wide for our Corporate Masters to relocate their headquarters here in Texas.

And while I've got the CTJ site up, here's a link from thinkprogress.org to a post about Goodhair's Texas "miracle."

The American people may still be stupid enough for Perry to emerge as the Republican nominee. In today's climate, it honestly wouldn't surprise me. But at least the rest of America has had fair warning now.

Manifesto Joe Is An Underground Writer Living In Texas.

Untold Story: Regressive Taxation, State And Local

By Manifesto Joe

Debates about taxes tend to be dominated by federal income tax policy. That in itself has become a scandal because of myriad corporate and personal tax dodges. But it ignores what lies at the base of taxation in America. At the state and local levels, taxes hit the poor and the working class hardest, in terms of percentage of income.

My home state of Texas has a special history of this. Sales taxes, user fees and other levies are mostly directed at people with lower incomes. Courtesy of state Rep. Lon Burnam, D-Fort Worth, here are some recent statistics:

State and Local Taxes as a Percentage of Household Income in Texas

Over $109,182: 4.7 percent

$69,614 to $109,182: 6.0 percent

$45,271 to $69,614: 6.4 percent

$24,899 to $45,271: 7.6 percent

Under $24,899: 12.8 percent

Source: The Center for Public Policy Priorities, May 2008

If you were to examine all the states, it might even get worse in some of them. In Texas, most groceries are exempt from sales taxes. I lived in Oklahoma for a while, and there, NOTHING is exempt from the sales tax.

The next time you encounter some anus-head doing the Rush Lardbaugh talking points about how the rich are so oppressed with their income tax burden, hit them with some of this. You won't change their "minds," but you might get the pleasure of seeing them stammer and look confused for just a moment.

Manifesto Joe Is An Underground Writer Living In Texas.