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From: renner@uiucdcs.UUCP
Newsgroups: net.politics
Subject: Can we really "soak the rich?" - (nf)
Message-ID: <29200123@uiucdcs.UUCP>
Date: Mon, 23-Apr-84 00:16:00 EST
Article-I.D.: uiucdcs.29200123
Posted: Mon Apr 23 00:16:00 1984
Date-Received: Wed, 11-Apr-84 07:35:51 EST
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Nf-ID: #N:uiucdcs:29200123:000:1949
Nf-From: uiucdcs!renner    Apr  9 23:16:00 1984

#N:uiucdcs:29200123:000:1949
uiucdcs!renner    Apr  9 23:16:00 1984

tim sevener (iuvax!scsg) writes: 
>  ...The best way to reduce our taxes is to make the rich pay theirs!!

Perhaps a few facts will help in understanding this issue.  My source
is the U.S Statistical Abstract (1982-3), table number 435: "Individual
Income Tax Returns, by Adjusted Gross Income Classes: 1965 to 1980."
All figures are in billions (1.0e09) of dollars.

The question here is:  can the tax burden of non-wealty individuals be
significantly reduced by increasing the tax burden of the wealthy?  In 1980,
the total individual AGI was 1,163.7 billion dollars.  The following table
shows what we could gain by taking the *entire* AGI of the wealthy classes;
that is, it shows the difference between their AGI and their current tax
burden.

confiscate all                                                % of
income of those    % of tax   total   current   increased   current
with AGI > than     returns     AGI      tax      revenue   revenue
$1,000,000           0.004      9.2      3.6        5.6       0.3
$500,000             0.017     17.5      7.9        9.6       0.5
$100,000             0.42     104.2     38.1       56.1       3.4
$50,000              3.1      269.2     77.6      191.2      11.8
$30,000             14.8      675.4    147.5      527.9      32.7

At this point we see that the "soak the rich" schemes have a problem.  There
seems to be a shortage of rich people.  Unless you define "rich" as having an
income greater than $50K, this scheme just can't raise a noticable amount of
money.  To bring in enough extra cash to cover this year's deficit, you would
have to take every nickel made by those earning over $50K and from some of
those earning $30-50K.

CONCLUSION:  an increase in the tax burden of the wealthy will not affect the
tax burden of the non-wealthy.  We will have to find some other way of
reducing our taxes; making the wealthy "pay theirs" won't work.

Scott Renner
{ihnp4,pur-ee}!uiucdcs!renner