advertisement

GUEST COMMENTARY: Paul Ryan's claims of taxing the rich filled with falsehoods

Thursday, May 19, 2011 | 4:42 p.m. CDT

Rep. Paul Ryan from Wisconsin revels in his reputation as America's ultimate conservative policy "wonk." He plays the part well. At the drop of a hat, the Republican lawmaker can rattle off a stream of stats that make his rich-people-friendly budget nostrums seem almost reasonable.

Last month, for instance, Ryan smoothly dispatched an angry constituent who dared challenge the tax-no-rich federal budget plan that has made the Wisconsin lawmaker a right-wing hero. That constituent, speaking at a town hall meeting, had just finished noting he saw "nothing wrong with taxing the top." Ryan saw his opening — and pounced.

MoreStory


Related Media

"We do tax the top," Ryan earnestly responded. "Let's remember, most of our jobs come from successful small businesses. Two-thirds of our jobs do."

"You got to remember," he went on, "businesses pay taxes individually. So when you raise their tax rates to 44.8 percent, which is what the president is proposing, I would just fundamentally disagree. That is going to hurt job creation."

For Ryan, a perfect sound bite. He made, in seconds, the case against raising taxes on the rich.

The wealthy, that case goes, already pay taxes aplenty. As hard-working — and mostly small — businesspeople, they can't afford to pay more. And if you try to make them, they won't be able to create jobs.

Does any of this hold water? Do we already "tax the top," as Ryan rushes to claim?

The facts: Taxpayers at America's tippy top — taxpayers with the nation's 400 highest incomes — have seen the share of income they pay in federal income tax drop from 51.2 percent of their income in 1955 to 18.1 percent in 2008.

How about Ryan's claim that the president wants to raise the tax rate to "44.8 percent"? Ryan here is blurring the distinction between top "marginal" tax rates, which apply only to a portion of one's income, and a taxpayer's overall tax liability, the total amount that he or she is required to pay.

Our tax code currently sports a top marginal rate of 35 percent, down from 91 percent in the 1950s. But this 35 percent top rate only applies to the portion of one's income over $379,150, not total income. President Obama wants to raise our top rate to 39.6 percent.

Americans also pay a federal payroll tax for Medicare. Under the health care act passed last year, wealthy Americans will soon pay a 3.8 percent Medicare surtax on income over $250,000 they make from investments. Until now, no Medicare taxes have been collected from taxes on investment income.

The health care reform act also puts a 0.9 percent payroll tax on wage income over $250,000, income that has previously gone untaxed.

Rep. Ryan, to get to his "44.8 percent," has mixed all these income and payroll tax rates together, a blatantly bogus exercise, especially because most small businesspeople don't make anywhere near $379,150, let alone $250,000. The actual small business income average is just over $100,000.

Paul Ryan's sound bite smudges another key reality as well: The big money America's rich make doesn't come from "creating jobs." The big money comes from "capital gains," the profits the rich make buying and selling stocks and other assets. These profits currently face only a 15 percent tax.

Few small businesspeople make much money off capital gains. Instead, they make their money when customers in their communities have jobs and money to spend. If the Ryan budget ever gets all the way through Congress — the House has already blessed it — small businesses would have fewer customers with dollars to spend. The reason: Ryan's budget cuts spending that helps average Americans to fund tax cuts for rich Americans.

Paul Ryan's sound bites have shoved what we need — substantially higher taxes on the rich — off the political table. We need to get them back on.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. This column was distributed through OtherWords.org, a project for the Institute of Policy Studies.


Like what you see here? Become a member.


Show Me the Errors (What's this?)

Report corrections or additions here. Leave comments below here.

You must be logged in to participate in the Show Me the Errors contest.


Comments

John Schultz May 20, 2011 | 9:57 a.m.

So I'll ask this question again, but expect it will get ignored by the Missourian and I'll need to contact Tom Warhover or someone at the office. Just why is "the Washington, D.C.-based Institute for Policy Studies" having numerous left-leaning pieces placed in the paper? Are they partnered with the J School or University in some way? How about some national commentary from John Stossel or another person with divergent views from someone who writes an " online weekly on excess and inequality" whatever that might be?

(Report Comment)
Jake Sherlock May 20, 2011 | 11:04 a.m.

John,

I'd be happy to explain why you've seen a couple of columns from OtherWords.org in the last few days ...

There is no partnership between the Missourian/J School and the Institute for Policy Studies. As you probably know, my first preference for op/ed material is from folks in our town or region. When I don't have commentary from local folks, as was the case this week, I turn to other, free sources for commentary that I hope will spark conversation and debate among our readers.

Besides the Institute, I've often pulled commentary from The Heritage Foundation and the Show-Me Institute.

The key here for me is that the commentary has to be free. I don't have a budget for syndicated columns, and frankly, I don't really want them anyway. I'm much more interested in the issues our local readers want to talk about, and I much prefer to work with our student columnists and community columnists to talk about issues important to Columbia, or to discuss national/international issues from a local perspective.

So, John, when you see a commentary from something like OtherWords, it usually means that I'm short on local submissions. And that was definitely the case this week, as my stable of student columnists mostly graduated last week or left for the summer.

If you or anyone you know is interested in voicing your opinion in the Missourian and on ColumbiaMissourian.com, please contact me at SherlockJ@missouri.edu or Letters@ColumbiaMissourian.com. I'd much rather hear from a local person than someone who already has a pretty big soap box like a Stossel, or a Donal Kaul, et al.

Thanks for reading,

Jake Sherlock
Opinion editor

(Report Comment)
John Schultz May 23, 2011 | 2:00 a.m.

Thanks for the insight Jake, much appreciated.

(Report Comment)

Leave a comment

Speak up and join the conversation! Make sure to follow the guidelines outlined below and register with our site. You must be logged in to comment. (Our full comment policy is here.)

  • Don't use obscene, profane or vulgar language.
  • Don't use language that makes personal attacks on fellow commenters or discriminates based on race, religion, gender or ethnicity.
  • Use your real first and last name when registering on the website. It will be published with every comment. (Read why we ask for that here.)
  • Don’t solicit or promote businesses.

We are not able to monitor every comment that comes through. If you see something objectionable, please click the "Report comment" link.

You must be logged in to comment.

Forget your password?

Don't have an account? Register here.

advertisements