Growls

We’ve growled on numerous occasions about liberals whining about the need to increase taxes “on the rich,” e.g., on October 31, 2008. Nor do liberals seem to believe that government revenues increase when tax rates are cut. Well, a new report from the IRS (requires Adobe) proves just how wrong liberals are.

The IRS report analyzes “the 400 individual tax returns with the highest AGIs in each year between 1992 and 2006 clearly shows that wealthy Americans are not a static elite club that no one can penetrate. Indeed, the report indicates a great deal of churning among the top 400 over the 15-year period analyzed . . . some 40 percent of the richest 400 are new to the club each year and only about 27 percent have been on the list more than once,” as the Tax Foundation describes it at their tax policy blog:

Mark Perry, who publishes the Carpe Diem blog, writes that the data show (see especially Figure 4 in the IRS report):

1. Of the group of 3,305 top earners from 1992-2006, 2,394 individuals made it into the top 400 only one time during the 15-year period. Those 2,394 one-timers represent 72.44% of the total (3,305), so only 27.56% made it into the top 400 more than once (see columns 2 and 3).
2. Moreover, 2,394 earners made it into the top 400 once (72.44%), and another 408 (12.34%) made it into the top group twice. So 84.78% made it into the top group either once or twice, and only 15.22% made it into the top group more than twice (see columns 2 and 3).
3. There were only 8 taxpayers out of 3,305 (1/4 of 1%) who were in the top 400 in all of the 15 years. (emphasis added)
   
4. In any given year, on average, about 40% of the returns were filed by taxpayers that are not in any of the other 14 years (see columns 4 and 5).

Dr. Perry points out that according to the IRS, "the data shown in the table mostly represent a changing group of taxpayers over time, rather than a fixed group of taxpayers."

The Tax Prof also has links to several news sources and blogosphere coverage. However, it seems the IRS has it exactly right when they say “the data . . . represent a changing group of taxpayers over time.” The data also raise a question of whether President Obama’s fully understands how America’s economy works.

According to the transcript of his speech, at Real Clear Politics, which announced the creation of his “middle class task force” on Friday, President Obama said:

“ . . . when I talk about the middle class, I'm talking about folks who are currently on the middle class, but also people who aspire to be in the middle class. We're not forgetting the poor. They are going to be front and center, because they, too, share our American Dream. And we're going to make sure that they can get a piece of that American Dream if they're willing to work for it.”

Well, Mr. President, why should anyone aspire only to be in the middle-class. Shouldn’t every American aspire to be the best they can be no matter what class that might mean? Mr. President, you and Congress should be lowering tax rates, eliminating unncessary regulations, and encouraging entrepreneurship rather than catering to special interest groups.