Class Warfare

Posted by PITHOCRATES - January 3rd, 2013

Politics 101

Over 99.5% of all Rich People ARE paying Federal Income Taxes

President Obama won reelection by denigrating Mitt Romney.  He didn’t win by running on a successful record.  He did not win by running on a plan to pull the economy out of one of the worst recoveries in history.  No.  He won it by getting people to hate Mitt Romney.  And by getting people to hate Republicans.  Who they painted as evil rich people who want nothing more than tax cuts for the rich.  And to take away birth control and abortion so only rich people can have access to them.  As well as taking welfare benefits from the poor.  It’s called class warfare.  And it can be very effective.  For it won President Obama a second term despite a horrible first term by almost any metric you measure it.  At least based on the majority of the electorate that just believed the rich aren’t paying their fair share.  So let’s just see who is paying what (see Table 3.  Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax, by Size of Adjusted Gross Income, Tax Years 2001-2010).

The above chart shows who are NOT paying any federal income tax.  Approximately 40% of all taxpayers.  Are these the evil rich people like Mitt Romney?  And those rich Republicans?  No.  Contrary to the Left, it’s not the rich.  They’re paying their taxes.  It’s the poor and the middle class not paying their fair share.  Those earning $5,000 and less pay virtually no federal income taxes.  Over 80% of those earning from $5,000 to $13,000 pay no federal income taxes.  You have to get up to those earning $25,000 or more before more than half of that income group pays any federal income taxes.

We don’t see who actually pays the majority of federal income taxes until we get into the middle class.  Where those who DON’T pay any federal income taxes rapidly drop away.  Those at the low end of the middle class taking advantage of the tax code to maximize their tax credits and deductions (mortgage interest, energy tax credit, medical and dental Expenses, child and dependent care credit, etc.) to reduce their tax bill.  While those at the higher end of the middle class are likely small business owners suffering a business loss.  Or a personal or business bankruptcy.  Approximately 0.8% of those earning $100,000 – $200,000 pay no federal income taxes.  While less than half of one percent of those earning $200,000 or more pay no federal income taxes.  Perhaps this tiny sliver of income earners are not paying their fair share.  But one thing for certain is that over 99.5% of all rich people ARE paying federal income taxes.

Those earning $1,000,000 and more account for less than 1% of Tax Exemptions and Deductions

So are the rich taking advantage of the tax code to reduce their taxable income and federal tax bill?  We hear a lot about tax loopholes.  Those perfectly legal tax credits and deductions written into law by the United States Congress.  That both those on the Left and those on the Right take advantage of.  Yet those on the Left have convinced enough of the electorate that these legal credits and deductions are tax evasion.  And that only the rich on the Right are using these to evade paying their fair share.  So who is taking the biggest advantage of the tax code to reduce their tax bill?  In 2010 this totaled about $3 trillion.  Is this why those earning $100,000 or more paid no income tax?  For those few not paying any federal income tax?  Not exactly.  (The dollar amounts in the following charts are in thousands of dollars.)

In 2010 taxpayers claimed in total about $3 trillion in exemptions and deductions.  The deficit in 2010 was about $1.3 trillion dollars.  So perhaps this is the reason why we had a deficit in 2010.  This is what the Left would have us believe.  It’s those tax loopholes that the evil rich take advantage of to avoid paying their fair share of taxes.  The only problem with this is that it’s not the rich taking advantage of these tax loopholes.  It’s the poor and middle class.

Those earning $1,000 and less account for less than 1% of these exemptions and deductions.  Those earning $1,000,000 and more also account for less than 1% of these exemptions and deductions.  It’s those earning from $1,000 to $1,000,000 that are taking advantage of these tax loopholes.  Especially those earning from $50,000 to $200,000.  The only income groups claiming 10% or more of the nearly $3 trillion in exemptions and deductions claimed.  So not only are the evil rich paying federal income taxes whatever they claim as exemptions and deductions doesn’t even come close to what the poor and middle class are claiming.

Prosperous Economic Times brought about by Tax Cuts INCREASED Tax Revenues

These numbers don’t exactly support the claim that the rich aren’t paying their fair share.  They’re paying federal income taxes.  And what tax loopholes they exploit hardly makes a dent in the amount of tax revenue the IRS collects.  Which can only mean one of two things.  Either the poor and middle class need to pay more federal income taxes.  Or the federal government is just spending too much.  Well, as we just witnessed in the fiscal cliff debate, President Obama and the Left want to raise taxes.  Blaming the record Obama deficits on the Reagan and Bush tax cuts.  Their deal includes higher income tax rates on households earning $450,000 or more.  But NO spending cuts.  Which will be a problem.

In 2010 the total adjusted gross income totaled just over $8 trillion.  Most of which came from 4 income groups.  About a trillion each from those earning from $50,000 to $75,000, from $75,000 to $100,000 and from $200,000 to $500,000.  Those earning from $100,000 to $200,000 earned in total almost $2 trillion.  Which means the new higher tax rates aren’t going to bring in much new tax revenue.  Because they aren’t taxing the people with the money.  The middle class.  And with some additional spending instead of spending cuts the deficit will only grow larger.  So this whole fiscal cliff debate was nothing but theatre.  For it wasn’t about deficit reduction.  It was about politics.

The Left wants to destroy the Republican Party.  And to do that they need to turn prosperous economic times brought about by the tax cuts of the JFK, Reagan and Bush administrations into the source of all our problems.  Yes the economy boomed, goes the argument, but at what cost?  Massive deficits.  Deficits not brought about by tax cuts.  But by spending.  For those prosperous economic times brought about by tax cuts INCREASED tax revenues.  The deficits resulted from spending increases greater than the revenue increases.  But with a successful campaign of class warfare they have revised history.  Those deficits are now the result of the rich not paying their fair share.   Which helped them increase tax rates on the rich today.  Because the Left got everyone to hate the rich.  And the Republican Party.  Even though the rich are the only ones paying their fair share.  In fact, they’re paying more than their fair share.  But the majority of the electorate doesn’t know this.  Because of that successful campaign of class warfare.

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FT97: “The poor may hate the rich yet that doesn’t stop them from trying to be rich.” -Old Pithy

Posted by PITHOCRATES - December 23rd, 2011

Fundamental Truth

Politicians use Class Warfare to Blame Others for their Economic Destruction

Class warfare is on the rise.  Which is typical during a presidential election season.  Especially when a president’s policies haven’t exactly improved the economy.  When your policies give Jimmy Carter’s misery index a run for its money you have to find something else to run on beside your record.  So you blame the rich.  Which tends to go over well for those who aren’t rich.  Because while they’re cutting back to stretch what little they have to last in the face of record unemployment, the rich aren’t.  It doesn’t help the un-rich.  But somehow having someone to hate brings them some comfort.

So they listen to the class warfare.  And like what they hear.  The rich aren’t paying their fair share of taxes.  Rich people paying millions in tax dollars isn’t enough.  They should pay more.  But they try not to.  Because they’re selfish.  Evil.  They hate poor people.  Hungry people.  Children.  And they really hate poor, hungry children.  For it is the rich who always oppose paying more taxes to help these people.  The poor never do.  They are always in favor of taxing the rich more to help other people.  To help themselves.  Because the poor aren’t selfish.  Or greedy.  Like the rich.  The rich have more than enough.  Everyone knows this.  So they should pay more in taxes.  After all, fair is fair.

At least, this is the thinking of class warfare.  It’s sort of like magic.  Magicians use misdirection to take your eyes away from what they’re really doing.  A little sleight of hand.  Doing something with one hand while they have you looking at the other.  You’re amazed.  And feel entertained for being fooled.  You like it.  And asked to be fooled again.  Politicians have picked up on this human desire.  And use it to their advantage.  To get us looking at something completely different.  And not the economic destruction they’re causing.  And then, like magic, we blame the rich for all the ills in our lives.

Poor People know one thing for Sure, it is Better to be Rich

So the rich are greedy, evil and selfish.  The scum of the earth.  We have nothing good to say about them.  Because money is the root of all evil.  And anyone who has money must be evil.  A classic American novel set during the Great Depression, The Grapes of Wrath, epitomized this when the mother wanted to treat her men to some sugar in their coffee but couldn’t afford it.  She asked for just a little free sugar.  The clerk said she couldn’t.  Because she wasn’t the owner.  And would get in trouble if she did.  But she gave her a little sugar anyway.  And slipped some of her own money into the till to pay for it.  A rich person wouldn’t do this.  Only a poor person would help another poor person.  Because the poor are good.  And the rich aren’t.

This is why class warfare works.  But there is a fatal flaw in it.  The poor people may say they hate the rich and want them punished, but it’s the poor people who are predominantly buying lotto tickets.  Why?  To become rich.

Rich people don’t buy lotto tickets.  Poor people do.  In hopes of a Cinderella rags to riches story.  Because poor people know one thing for sure.  It is better to be rich.  And they will spend their meager wages on lotto tickets for that gazillion in one chance of becoming rich.

More Government Benefits paid for by the Rich is the Ultimate Goal of Tax and Spend Class Warfare

Of course, a person’s definition of ‘rich’ differs from another.  And for the most part it’s relative.  To their own wealth.  Anyone who has more than them is rich.  And because someone always has more than they have they are not rich.  Simple.  So class warfare works.  Despite its fatal flaw.

But class warfare isn’t about fairness.  It’s just misdirection.  A little political sleight of hand.  To help a politician escape blame for the economic damage they’ve caused.  By tapping into a base human trait.  Greed.  That insatiable desire to get-rich-quick.  By spending their meager wages for that gazillion in one chance.

Or for more government benefits paid for by the rich.  The ultimate goal of tax and spend class warfare.  Something the poor are all for.  Because fair is fair.  Until, that is, they do win the lotto.  And these people see what it’s like to have more than others have.  As people crawl out of the woodwork to ask for some of their new found wealth.  Because they have more than enough.  And should share.  Because fair is fair.

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