- Apr 12, 2008
- Reaction score
- real world
Class warriors got what they wished for in the first year of the Obama presidency. Now the 2009 tax return numbers are out, and I can update you on the class wars I wrote about last year.
I wrote then, "Tax figures for 2009 are not yet available. I suspect they will show the same pattern: loss of federal revenue due to loss of income at the higher levels."
Well, now tax figure for 2009 are available, and yes, they do show that same pattern.
All numbers below are based on the latest IRS data, specifically Table 1.1. (Note: Table 1.1 is for all tax returns, not just the taxable ones.) The comparisons are between the years 2007 and 2009, capturing the depth of the Great Recession.
The main reason federal revenues were down was that personal incomes were down. Total adjusted gross incomes (AGI) less deficits declined $1.1 trillion, or 12%. However, due to our progressive income tax, the percentage decline in taxes collected was even greater: 22%.
You see, when you get rid of rich people, like class warriors want, you also get rid of the taxes they used to pay. Of the $250-billion drop in personal income taxes, $175B (70%) was due to declines in incomes over $200K. No rich people, no taxes from rich people.
The chart below shows the total incomes of those making over $200K and over $1M per year from 2006 through 2009. The total income on those making over $1M was cut almost in half from 2007 to 2009.
In the Great Recession, the "rich" suffered the most. (For convenience, I use the term "rich" loosely here, simply meaning higher incomes in a given year, not wealth.) The tables below show how the number of "rich," their incomes, and taxes collected from them all declined. These tables also show that the higher the income group, the greater the decline in income and taxes on that income.
I can think of two ways to solve the dilemma, if you call lack of federal revenue a dilemma. (1) Create more rich people. (2) Raise tax rates on those making under $200K. Wow, class warriors aren't going to like those choices.
After all, raising taxes on those making over $200K, as President Obama constantly urges, does no good if no one is making over $200K, as all of Obama's other policies constantly promote.
It's a conundrum.