In Defense of 'The Rich'

Opinion Editorial by Larry Elder - Oct 9, 2008

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So, what do “the rich” pay in federal income taxes? Nothing, right?

That, at least, is what most people think. And Democratic presidential candidate Barack Obama wants to raise the top marginal rate for “the rich” — known in some quarters as “job creators.”

A recent poll commissioned by Investor’s Business Daily asked, in effect, “What share do you think the rich pay?” Their findings? Most people are completely clueless about the amount the rich actually do pay.

First, the data. The top 5 percent (those making more than $153,542 — the group whose taxes Obama seeks to raise) pay 60 percent of all federal income taxes. The rich (aka the top 1 percent of income earners, those making more than $388,806 a year), according to the IRS, pay 40 percent of all federal income taxes.

The top 1 percent’s taxes comprise 17 percent of the federal government’s revenue from all sources, including corporate taxes, excise taxes, social insurance and retirement receipts.

Now, what do people think the rich pay? The IBD/TIPP poll found that 36 percent of those polled thought the rich contribute 10 percent or less of all federal income taxes. Another 15 percent thought the rich pay between 10 and 20 percent, while another 10 percent thought the rich’s share is between 20 and 30 percent.

In other words, most people thought the rich pay less — far less — than they actually do. Only 12 percent of those polled thought the rich pay more than 40 percent.

Let’s try this another way. A U.S. News & World Report blogger went to the Democratic National Convention in Denver and conducted an informal poll of 24 DNC delegates.

He asked them, “What should ‘the rich’ pay in income taxes?” Half the respondents said “25 percent”; 25 percent said “20 percent”; 12 percent said “30 percent”; and another 12 percent said “35 percent.”

The average DNC delegate wanted the rich to pay 25.6 percent, which is lower than what the rich pay now — both by share of taxes and by tax rate!

Thirty percent of American voters pay nothing — zero, zip, nada — in federal income taxes. And, not too surprisingly, compared with taxpaying voters, they are more likely to support spending that benefits them.

The majority of the 30 percent who don’t pay federal income taxes agree with Obama’s $65 billion plan to institute taxpayer-funded universal health coverage. But the majority of the 70 percent who pay federal income taxes are opposed to Obama’s health care plan.

Non-taxpayers support Obama’s plans for increased tax deductions for lower-income Americans, along with higher overall tax rates levied against middle- and upper-income households.

The majority of non-taxpayers (57 percent) also favor raising the individual income-tax rate for those in the highest bracket from 35 percent to 54 percent. And the majority (59 percent) favors raising Social Security taxes by 4 percent for any individual or business that makes at least $250,000.

Obama calls increasing taxes and giving them to the needy a matter of “neighborliness.” Vice presidential running mate Joe Biden calls it a matter of “patriotism.”

Yet when it comes to charitable giving, neither Obama (until recently) nor Biden feels sufficiently neighborly or patriotic to donate as much as does the average American household: 2 percent of their adjusted gross income.

Liberal families earn about 6 percent more than conservative families, yet conservative households donate about 30 percent more to charity than do liberal households. And conservatives give more than just to their own churches and other houses of worship. Conservatives, especially religious conservatives, give far more money and donate more of their time to nonreligious charitable causes than do liberals — especially secular liberals.

In 2007, President George W. Bush and his wife had an adjusted gross income of $923,807. They paid $221,635 in taxes, and donated to charity $165,660 — 18 percent of their income.

Vice President and Mrs. Cheney, in 2007, had a taxable income of $3.04 million. And they paid $602,651 in taxes, and donated to charity $166,547 — 5.5 percent of their income.

Barack Obama and his wife, Michelle, earned between $200,000 and $300,000 a year between 2000 and 2004, and they donated less than 1 percent to charity. When their income soared to $4.2 million in 2007, their charitable contributions went up to 5 percent.

Joe and Jill Biden, by contrast, made $319,853 and gave $995 to charity in 2007, or 0.3 percent of their income. And that was during the year Biden was running for president. Over the past 10 years, the Bidens earned $2,450,042 and gave $3,690 to charity — or 0.1 percent of their income.

So let’s sum up. The “compassionate” liberals — at least based on charitable giving — show less compassion than “hardhearted” conservatives. The rich pay more in income taxes than people think. Voters, clueless about the facts, want the rich to pay still more.

Larry Elder is a syndicated radio talk-show host and the author of Showdown: Confronting Bias, Lies, and the Special Interests That Divide America. He is also host of daytime TV's "The Larry Elder Show," and enthusiastically recommends Atlas Shrugged to visitors of his web site.