The Forgotten Five
Table of Contents:
- Executive Summary
- The Wealthiest Americans Pay Most of the Federal Income Taxes
- Government Programs Can Harm the Environment; Free Enterprise Can Help It
- Domestic Social Spending Continues to Soar
- Social Security, as Currently Structured, Will Bankrupt Future Generations
- Government Health Care Mandates Increase the Number of Uninsured Americans
Missing Economic Fact #1:The Wealthiest Americans Pay Most of the Federal Income Taxes
"The President thinks [the GOP's] tax cuts are too generous to the wealthy," claimed ABC's John Cochran on the June 9, 1997 World News Tonight. Paula Zahn, on the June 30, 1997 CBS Evening News, said President Clinton "disagrees with key parts of the tax cut bills passed by the House and Senate because they give too many breaks to the wealthy and not enough to middle-income Americans."
Cochran and Zahn are not alone. Most network reporters repeat the claims of those who oppose tax reform without putting those claims into context. Specifically, they fail to provide basic facts about who pays taxes and how tax rates affect the distribution of the tax burden.
"According to IRS data," writes Daniel J. Mitchell, an economist at the Heritage Foundation, "the top one percent of income earners pay nearly 29 percent of the income tax burden, the top 10 percent pay more than 59 percent, and the top 20 percent pay more than 74 percent. The bottom 50 percent of income earners, on the other hand, pay less than five percent of income taxes."
Mitchell also calls a myth the claim that lower tax rates necessarily mean the rich will pay less. "This outcome depends on how much tax rates are reduced," he argues. "History indicates that the revenue-maximizing rate is less than 30 percent. In other words, when marginal rates are higher than 30 percent, the rich probably will pay more if rates are lowered. The reason: Because incentives to hide, shelter, and underreport income are reduced."
Mitchell points out that in the 1920s, the 1960s, and again in the 1980s, the wealthiest taxpayers shouldered more of the tax burden as their tax rates fell. For instance, "the Reagan years saw the top tax rate fall from 70 percent in 1980 to 28 percent in 1988. What happened to the rich? The top one percent went from shouldering 17.6 percent of the income tax burden in 1981 to paying 27.5 percent of the total in 1988. The top 10 percent saw their share climb from 48 percent in 1981 to over 57 percent in 1988."1 Despite the large amount of time devoted to the tax issue by the networks, they rarely go into enough depth to provide basic information to viewers about the wealthy and taxes.
Sources For Journalists
Whom To Call For More Details On This Missing Fact
|Bruce Bartlett||National Center for Policy Analysis||(202) 628-6671|
|J.D. Foster||Tax Foundation||(202) 783-2760|
|Daniel Mitchell||Heritage Foundation||(202) 546-4400|
|Stephen Moore||Cato Institute||(202) 842-0200|