The only thread on the internet that ever settled an argument?

I never actually got a formal declaration of surrender from the man who goes by Baggi and who started the thread. However, after he posted that I had some good points and would reply later, he abandoned the thread and went on to start others. Eventually I posted this and did not get a reply.

"...since Baggi has not delivered a counterpoint....did this thread actually accomplish the impossible and settle an argument?"

Update: turns out he did not concede the argument, although his main rebuttal since I posted this blog entry is that he's actually a unicorn. The entire thread is here. Baggi claimed that the Bush tax cuts (which Obama plans to end and McCain wanted to continue) actually did not benefit the rich for two reasons:

1. Under the Bush tax cuts, the top 20% of earners (or "Top Quintile") got a lower tax cut than the bottom 80% (the next four "Quintiles"), as shown here:

The 2005 total effective federal tax rate as a percentage of the 2000 rate.
Top Quintile = 91.1%
Fourth Quintile = 84.9%
Middle Quintile = 85.5%
Second Quintile = 76.2%
Bottom Quintile = 67.2%

Or in other words, the top 20% of earners ("Top Quintile") saw their tax rates drop only 8.9%, while the next 20% ("Fourth Quintile") got a whopping 15.1% tax cut.

2. The wealthy are paying a higher percentage of the total tax revenue (up two percent from 2000 to 2005)

How do you refute these arguments? Well, let's use some logic and facts of our own. Let's tackle point #1. What's the top quintile all about?

Here's some good data about the distribution of wealth in this country, including this graph:



Yikes - do the top 5% really own 60% of the wealth in the country? If so, the top 20% is meaningless as a demographic. A person in the top 1% might employ someone at the bottom of the top 20% as their driver, but otherwise these are entirely separate groups.

The bottom of the top quintile in 2004 brought home $88K as their annual household income. This is hardly upper class. And yet, using the quintile breakdown we can lump in the $88K earner with Bill Gates. Brilliant.

Why does this matter, though? Well, the very rich are not like us, according to the Washington Post from August 2004.

The effective federal tax rate of the top 1 percent of taxpayers has fallen from 33.4 percent to 26.7 percent, a 20 percent drop. In contrast, the middle 20 percent of taxpayers -- whose incomes averaged $51,500 in 2001 -- saw their tax rates drop 9.3 percent.

Okay, I think we've just about demolished the first argument. The top 1% who control some 34% of the country's wealth got a vastly higher tax break than the top 20% overall. And the lower top 20% include those pulling in the princely sum of $88K per year to support their household, which is doing well in some parts of the country and barely scraping by in others.

On to the next claim: as a result (or despite) of the tax cuts, the wealthy are paying more of their share of the total tax revenue, proving that the tax cuts hurt rather than helped them. Well, this is easy enough to demolish with this boring spreadsheet from the Economic Policy Institute.

It's too wide to fit in this blog, but it shows is that that the the top 1% went from pulling in 14.3% of the country's pretax income in 2003 to pulling in 18.1% in 2005, which is a 26.5% increase and more than their 20% tax cut. At the same time the people in the 80% to 95% range (who make roughly between $90K and $150K a year) saw their share of pre-tax income go down.

To dumb down these numbing statistics, the top 1% got a break on their taxes and got even more filthy rich while the rest of us got poorer.

I hope this clears things up. The next time someone tries to say that the rich are overtaxed because they pay most of the tax revenues, smack your hand on your forehand and point them to this page.