I find that the rhetoric about extension of the Bush tax cuts demonstrates the economic ignorance of most of our elected officials..
Sen. Chuck Schumer and Sen. Barbara “Don’t call me M’am” Boxer are running around screaming that how extending the high bracket tax breaks is “simply giving undeserved tax breaks to millionaires and billionaires”.
Yes indeed, the high bracket includes some millionaires and billionaires.
Here’s the rub: it includes way more people who aren’t millionaires or billionaires.
The high end brackets start at $250,000.
In 2008, according to the IRS, about 138 million people filed tax returns.
Of the 138 million, approximately 2.8 million (2% of total returns) reported AGI greater than $250,000.
354,093 tax payers — 12.8% of the 2.8 million high bracketers – reported AGI greater than $1 million.
In other words, almost 9 out of 10 tax payers in the vilified high brackets earn less than $1 million.
Hmmm.
Now, anybody who has taken a business or economics course knows that there is a difference between wealth and earnings. (Note – this group doesn’t include many Congressmen, Senators, or members of the Administration).
Earnings are a “flow” and wealth is a “stock”.
Think water flowing into a pool. The accumulated water in the pool is liquid wealth.
Now, some people who earn more than $1 million spend it all They accumulate no meaningful wealth. They’re not really millionaires. They’re wasteful idiots.
And, some people who earn less than $1 million annually, practice thrift and savings … and accumulate more than $1 million.
Obviously, these people are evil millionaires and should be penalized for not spending like a drunken Congressman. They should be taxed high every year and then have their wealth confiscated when they die.
Huh?
My take: Schumer and Boxer wouldn’t know a millionaire if they saw one – unless they were just looking around the Senate. Then, the odds would be in their favor.
The Homa Files 
December 10, 2010 at 7:21 am |
Will tax cuts for the wealthy cut the deficit?
Will tax cuts for the wealthy create jobs?
Will tax cuts for the middle class stimulate the economy?
I doubt it. For some thoughts on these things visit the tax cut page on my blob
December 12, 2010 at 9:21 pm |
What I don’t get is why if they want to tax the wealthy, why they don’t make the tax on say, $1,000,000 or more. Why this 250K nonsense?
Of course, taxes on the wealthy are generally deleterious in terms of capital flight, but at least, that is a more principled approach.
December 13, 2010 at 7:20 am |
I doubt that politicians are ignorant of economics. They just talk and act that way because they can sell it to the majority of Americans who don’t understand economics and don’t want to.