94 Years of Serfdom

Ralph Gomory, coauthor with William Baumol of the most important work in trade theory ever published, Global Trade and Conflicting National Interests (MIT Press, 2000), has suggested that jobs would flow back to America instead of continuing to leave if the corporate income tax were replaced by taxing corporations on the basis of whether the value added to their products occurs at home or abroad. 

The ecological economist Herman Daly has suggested that the tax base be moved off of income and on to the use of increasingly scarce natural capital.  Non-renewable resources are being depleted, and the over-use of nature’s waste absorption services is resulting in pollution and environmental destruction. 

Taxing the use of natural capital would conserve it and lead to its more rational use.

These promising tax ideas directly address the most pressing economic and environmental problems of our time, but they cannot be considered because people are still absorbed in class warfare.

A mainstay of class war is the propaganda that “the rich don’t pay taxes.”  This myth lives on despite the annual release of IRS data that proves the contrary.  In 2006, the most recent year for which data is available, Americans whose tax returns placed them in the top 1 percent earned 22.1 percent of adjusted gross income and paid 39.9 percent of all federal individual income taxes.

The top 5 percent, defined as rich by President Obama, paid 60.1 percent of all federal individual income taxes. The top 10 percent paid 71 percent.

Those Americans whose earnings placed them in the bottom half of the income distribution paid less than 3 percent of the individual income tax collected.

The immunity of many Americans to facts is impressive. Just as many Americans continue to believe that Saddam Hussein had weapons of mass destruction and hid them in Syria, Russia, or Iran, many Americans will continue to believe that “the rich don’t pay taxes.”

 1  |  2