James Piereson, Senior Fellow at the Manhattan Institute, had some thoughts on these folks.
This crusade [against the richest among us] is based on three questionable claims. One is that the wealthy are mostly Wall Street bankers benefitting from rising stock and real estate prices, or executives who pay themselves extravagant salaries. Another claim is that such people unfairly benefit from a system that taxes capital gains at half the highest marginal rate paid by those who earn salaries and wages. Then there is the assertion that the “super rich” have abundant funds that can be taxed to improve the living standards of everyone else.
All of these claims are false. By promoting them, the president and his supporters may hope to distract attention from ObamaCare and the economy.
My father always said, “Never let the truth interfere with a good story.” The difference, though, between my father and President Barack Obama and his fellow…crusaders…is that my father was joking.
[According to] data compiled by the Congressional Budget Office, the top 1% received 15% of the national household income (before taxes) in 2010, up from 9% in 1980. A taxpayer needed a taxable income of $307,000 to enter the top 1%, a figure that hardly qualifies as “rich” today, especially in cities like New York, Chicago, Los Angeles or San Francisco.
[Top] performers earn their incomes in highly competitive environments and through the voluntary patronage of consumers. Where does their money come from?
The top earners depend heavily on salaries. In 2010 the top 1% earned 36% of their incomes from salaries and wages (what the CBO calls labor income); 22% from businesses, farms, and partnerships; and just 19% from capital gains. The majority of their income would thus be taxed today either at the corporate or the highest marginal rate rather than at the lower capital-gains rate of 23.8%.
There’s this tidbit, too:
From 1980 to 2010, as the top 1% increased their share of total before-tax income to 15% from 9%, their share of the individual income tax soared to 39% of the total paid, up from 17%. Most were paying federal taxes at the highest marginal rate[.]
A 60% increase in income share (from a very small share to a small share) “matched” by a 129% increase in income tax share from small to large. Hmm….