I?d also like to know why Johnston never mentions the fact that the wealthiest Americans suffered the most in the stock market plunge and asset deflation of 2000-02. One reason the richest seemed to pay less in taxes during this period is that they were the hardest hit during the deflation.
Johnston singles out the top 145,000 taxpayers who comprise the top 0.1 percent of income distribution in 2002. Their average income was $3 million, two-and-a-half times the inflation-adjusted $1.2 million that the group reported in 1980. My gosh -- how dare they be successful earners and investors?
Over that 22-year span, this group probably included the very same people who launched tens of thousands of new companies that hired roughly 40 million net new workers that completely revolutionized the U.S. economy through unbelievable breakthroughs in the realms of information technology, communications, finance, health care, and retailing.
Should we go out and shoot these 145,000 for their success?
These entrepreneurs use their God-given talents within the Reaganesque free-market framework that deregulated, slashed tax rates, and provided the first strong dose of economic incentives since the 1920s. A rising economic tide over the last 20 years has lifted living standards, productivity, and employment throughout America. Everyone got richer, with a full $39 trillion in new wealth created during this period. That?s why the unemployment rate has been averaging 5 percent over the past 10 years, with non-financial productivity running about 5 percent and inflation virtually nil.
Of course, the bulk of Bush?s 2003 tax cuts on dividends and capital gains will help people with the highest incomes, but they pay the most taxes in the first place. The tax cuts will also help the entire 100-million-strong investor class -- about 50 percent of U.S. households. But when the new IRS income statistics for 2004 and 2005 are published, we will undoubtedly find that lower tax rates -- particularly on investment -- have again generated much higher tax collections for the so-called richest among us. Already, for the twelve months ending April 2005, non-withheld tax receipts (read capital gains and dividends) rose an astronomical 36 percent.