Say It Again

The recent debate over the payroll tax and unemployment compensation extensions made it clear that many of the professed Ayn Rand worshipers on Capitol Hill are also students of George Orwell. The Ministry of Truth in Orwell’s novel 1984 was tasked with repackaging and repeating misinformation until it became reality (by sheer repetition) for those living beneath the watchful eye of Big Brother. We have heard from the Ministry of Truth that the following are truths about the top 1% wage earners in this country:

The top 1% wage earners are paying their fair share of taxes at 38%;
The top 1% wage earners are job creators in this country;
The top 1% wage earners would create less jobs if taxed more.

The Ministry of Truth has been spinning this mantra for some time now hoping with repetition we will forget the reality from which these truths were repackaged. The reality is:

1. According to data compiled from the Congressional Budget Office, the top 1% paid an average income tax of 19% in 2007, less than wage earners making less income annually. The 38% figured used is the statutory tax rate for this income category. By the way, the statutory tax rate for this income group in 1963 was 91% more than double what it is today.
2. Most small business owners are not in the top 1% wage earner category and do not fuel job creation. The corporations paying the top 1% wage earners have in fact, been job destroyers, making significant profits by moving jobs abroad. The top job creators according to US News in the last 30 years are young start-ups like Amazon, Google and Facebook, job creators that would rather do without help from Capitol Hill and the Ministry of Truth.
3. Since the top 1% wage earners aren’t job creators, whether they are taxed at a higher rate or not will have no direct impact on whether or not more jobs are created. It is certainly worth noting however that Bill Clinton increased the statutory tax rate for the top 1% in 1993, in spite of dire warnings of job losses from supply-siders and the Ministry of Truth. The result of increasing taxes on the top 1% wage earners in 1993 was an increase in job creation! In fact, during Clinton’s 8 years with no tax cuts 22.7 million jobs were created; versus the 8 years of George W. Bush’s tax cutting, which created a mere 1.08 million. Today the top 1% is paying much less than ½ what they paid in federal income tax in the 1960’s—where are all the jobs this tax savings should be creating according to the Ayn Rand devotees?

The fact is, we stand a much better chance of creating more jobs and gaining greater fiscal responsibility by taxing this group of wage earners who has benefited most from American capitalism. The top 1% wage earners are not job creators and do not contribute their fair share per capita to the federal income tax pool. Now would be a great time to eliminate the welfare we have extended to this group since the mid-60’s and use the savings to extend unemployment compensation to the people who lost their jobs, in large part, to ensure the continued bonuses and outrageous corporate salaries extended to the top 1% wage earners.