WASHINGTON -- The demonstrably false party line being peddled by President Obama and the Democrats in the budget battle is that tax increases must be a large part of the deal because corporations and the rich don't pay their fair share.
How large? Brace yourself. Senate Budget Committee Chairman Kent Conrad of North Dakota was reportedly briefing his Democratic leaders behind closed doors Wednesday on a budget bill that would gouge more than $2 trillion out of a weak, underemployed economy that's still struggling to regain its health.
Prescribing tax hikes of that size, of any size, in this painfully slow-paced economy would be the medical equivalent of bleeding a bedridden patient suffering from acute anemia.
What American businesses need most right now is an economy-wide transfusion of fresh capital investment via tax-rate cuts offset by major spending cuts.
As for the Democrats' claims that the wealthiest segments of our economy are not paying their fair share of taxes while major poverty programs are undernourished, nothing could be further from the truth.
After crunching IRS revenue data, the nonpartisan Congressional Budget Office reported earlier this year that the richest 20 percent of all taxpayers pay a record 86 percent of all federal income taxes. That's more than they were paying when Ronald Reagan entered the White House (64 percent) and more than when George W. Bush took office (81 percent).
The tax burden shift came about in part when Bush cut marginal tax rates across the board in 2001 and 2003 from the highest income brackets to the lowest, which he cut by one-third while doubling the refundable child tax credit. That alone removed 10 million low-income families from the income tax rolls.
"In fact, the poorest 40 percent of households now pay zero income taxes, and many actually receive checks from Washington on April 15," Heritage Foundation budget analyst Brian Riedl wrote earlier this year.
"The data are clear. Nearly every year, the federal tax burden tilts even further toward upper-income taxpayers," Riedl said. "Seekers of a more progressive tax policy should answer two questions: If 86 percent of the income tax burden is not enough, how much should the top 20 percent of taxpayers pay? And if the bottom 40 percent paying no income taxes is not sufficient, what is?"
The ratio doesn't change much even when you throw in all federal taxes -- corporate, payroll and excise taxes. In 1980, the wealthiest 20 percent paid 55 percent of all federal revenue. The top 20 percent now pay 69 percent.
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