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Tuesday, July 22, 2014

WaPo: 4 Pinocchios for Rocker’s Off-base Claims About Taxes and the ’1 Percent’

Washington Post:  4 Pinocchios for a Rocker’s Off-base Claims About Taxes and the ’1 Percent’:

Kiss“The 1 percent pays 80 percent of all taxes. Fifty percent of the population of the U.S. pays no taxes. The 1 percent provides all the jobs for everybody else. If the 1 percent didn’t exist, there would be chaos and the American economy would drop dead.”

–Kiss bassist Gene Simmons, in an interview with the San Diego Union-Tribune, published July 4

Kiss rocker Gene Simmons is not a politician, but here he echoes claims that are often made by politicians about who pays taxes in the United States.

There is certainly a history of rock stars being unhappy with taxes. George Harrison of the Beatles penned the iconic “Taxman” after discovering that he was liable for the 95 percent margin tax rate imposed on income at that time in the United Kingdom.

In the interview, Simmons is an unabashed fan of the “1 percent lifestyle,” calling it “fantastic” and noting, “I have been part of the 1 percent for the past 30 years.” We will assume his bold assertion that the 1 percent provides “all of the jobs for everybody else” reflects his enthusiasm rather than hard data. But do his tax claims add up? ...

Simmons may enjoy the 1 percent lifestyle, but he needs to get his facts straight. The top 1 percent certainly pays a large share of taxes (and has a large share of income) but his claims are wildly off-base, especially when talking about “all taxes.”

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(Hat Tip: Bryan Camp.)

http://taxprof.typepad.com/taxprof_blog/2014/07/wapo-4-pinocchios-f.html

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Comments

Is this the guy who tried to come on to Terry Gross in an interview?

Posted by: mike livingston | Jul 22, 2014 4:48:20 AM

Fascinating. I wonder how many time he WaPo "fact"checkers have checked the accuracy of the 99% of other celebrities who speak ex cathedra from the Liberal side of the argument -- on any argument.

Posted by: MG | Jul 22, 2014 6:53:01 AM

I would like a little consistency all around. Either we count payroll taxes as part of your tax burden and then agree by corollary that it's one big pot of money and you didn't pay one dime for your old age benefits, or we saying you paid for at least a part of them but payroll taxes aren't part of your tax burden any more than your rent bill is - just a (partial!) payment for services rendered to you and you alone.

Posted by: ryan p | Jul 22, 2014 8:26:20 AM

ryan p,

I'm afraid that social security cannot be so easily bucketed as you propose. In truth it is a hybrid. On the one hand it is a type of defined benefit retirement plan to which everyone contributes and from which everyone benefits. On the other hand, it has a significant “welfare” component insomuch as the return is designed to be lousy for high income earners (i.e., those who contribute the most) and quite good for lower income earners (i.e., those who contribute the least). Conservatives have long made peace with the welfare component as long as it does not become too pronounced (e.g., consider the implications of removing the wage caps), just as liberals have accepted the idea of the wealthy receiving benefits as long the imbedded returns are sufficiently lousy as to subsidize the benefits of others.

My own view is that since (i) Social Security is and always has been predominantly operated as a retirement insurance program and (ii) has always been primarily sold to the voting public as such, it is fairest to take it off the table for purposes of evaluating the progressivity of federal taxes. When evaluating true tax burdens one must evaluate longitudinally to avoid what would otherwise be truly deceptive, even dishonest, conclusions. In other words taking into account the distribution of Social Security taxes without taking into account the distribution of Social Security benefits associated with such taxes would paint a very dishonest picture. For this reason, it is best to look only to income taxes for purposes of making the federal progressivity determination, and then recognize that such determination actually understates progressivity because if fails to take into account the welfare component of Social Security.

Posted by: Mike Petrik | Jul 22, 2014 1:49:32 PM