“There are 10^11 stars in the galaxy. That used to be a huge number. But it’s only a hundred billion. It’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.”
The quote can be found on numerous internet sites but none of them seem to give a precise source. Wikipedia classifies the quote as unsourced and doesn’t allow it to be attributed without authentication. Assuming it is authentic, however, it can be deduced what Feynman was actually referring to: namely, you guessed it, Reagan deficit spending. Reagan was the first and only president during Feynman’s lifetime (1918-1988) to exceed the 100 billion dollar national deficit mark, and the first and only to exceed the trillion dollar debt mark. Not that you’d know it from reading Arkansas Democrat-Gazette editorials.
The editorial is titled – wait for it – “The Road to Serfdom” and is written as if no president before Obama had ever had a budget deficit or raised the debt ceiling. Whatever. One old old old right-wing argument is being trotted out prominently:
At last report, the richest 5 percent of American earners were already paying almost 60 percent of federal income taxes, and the top 10 percent were paying 70 percent. How much more can government take without reducing the private sector, the real revenue-generator and jobs-producer of the American economy, to insignificance? To use a metaphor as old as Aesop, how long can taxes on the largest incomes be raised without killing the goose that lays the golden eggs? (…) After a while, there just aren’t enough rich folks to soak. While the high earners are paying a larger and larger percentage of income taxes, the bottom half of American taxpayers-50 percent-pay only 2.7 percent of all income taxes collected.
Ok let’s play the “find the mistakes” game.
1. How can the rich be overwhelmed by taxes, “reduced to insignificance”, when their tax rates are in fact the lowest in 60 years (see chart below)? The decade since 2001 – not just the 2007 recession but the whole decade – has been the worst performing for the American economy since World War II while income tax rates on the rich have been at their lowest in that period (the top rate was 91% during Eisenhower). So much for the “goose laying golden eggs” fairy tale.
2. The editors also fail to mention that the rich are paying an increasing share of income taxes because they have managed to dramatically increase their share of the national income (read Hacker/Pierson, Winner-Take-All politics).
3. Most importantly, the figure about the income tax share of the rich versus the poor is extremely dishonest because low-income Americans, while paying little income tax, pay significant amounts in Social Security taxes, sales taxes, gas taxes, and so on. State taxes are notoriously regressive: in all states, the poorest 20% of residents pay more – often significantly more – of their income in state and local taxes than the richest 1%! (see Soaking the poor, state by state)
When all these taxes are taken together, the share of the poor and middle class is much higher. In fact, when all taxes are accounted for, all income groups pay taxes about proportional to their income share (see chart below). Further, the effective tax rate (all taxes actually paid taken together) is in many cases higher for low-income workers than for billionaire hedge fund managers.
In other words, according to ADG economic genius, the super-rich, making more money and paying lower tax rates than any time since at least WWII, really can’t contribute even a cent more to deficit reduction. There really is no other alternative than to soak the poor.
Nice hack job. Can these guys sleep at night?
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