When Rep. Alexandria Ocasio-Cortez posted a photo of her unmasked self wearing a white dress marked with “TAX THE RICH” in blood-red letters, she at least made sure to praise the help — her dressmaker, who of course was there with her in the photo, wearing a mask.
Ocasio-Cortez then wore her dress that night to an event with millionaires and billionaires at New York City’s Metropolitan Museum — again, not wearing a mask, because as every good Democrat knows, masks are for the help.
Don’t tell Ocasio-Cortez or her comrades, but the United States has the most progressive tax code in the known universe. That’s a fact.
Ocasio-Cortez’s out-of-touch behavior regarding the raging epidemic could be taken as a broader symbol of Democrats’ out-of-touch attitude toward taxes. They claim that they want to tax the rich, but they preside over a system that already does so. Meanwhile, in their deep ignorance, they propose tax hikes that would squeeze blood out of the middle class and even the poor, all supposedly in the name of taxing the rich.
In 2018, the most recent year for which data are available, the top 50% of earners made 88% of all income yet paid 97% of all individual income taxes, according to IRS data compiled by the Tax Foundation.
That’s right — the bottom 50% of earners paid just 2.9% of the total federal income tax burden that year.
The top 1% of earners took in just 21% of all income in the U.S., yet they paid 40% of all federal income taxes. This latter number, by the way, has increased over time — up from 33.2% in 2001.
In 2018, the top 10% of earners made 48% of all income yet paid 71% of all federal individual income taxes.
Another way to look at the tax burden is to measure average tax rates for those with lower or higher incomes. Here, too, it is clear that those with higher incomes pay higher effective rates. On average, the bottom 50% of earners pay 3.4% in individual income taxes; the top 50% pay 14.6%; the top 25% pay 16.8%; the top 10% pay 19.9%; the top 5% pay 22.0%; and the top 1% pay 25.4%.
So, yeah — the idea that the rich pay nothing is simply a detestable lie, based on anecdotes not at all representative of reality.
And no, the federal government is not failing to tax the rich. Top earners are more than adequately taxed, and in fact, their taxes have steadily risen over time under presidents of both parties.
That is what the world’s most progressive tax system looks like. It seems to fit the definition of “tax the rich.” But wait — there’s more.
Democrats’ current preoccupation with raising corporate income tax rates would actually shift the burden of taxation back toward the poor. That is because corporate income taxes are not just paid by Ocasio-Cortez’s wealthy, maskless friends. Unlike the individual income tax, which is almost entirely paid by the top earners, the corporate income tax burden is shared between all consumers (they pay in the form of higher prices), all employees (they pay in the form of fewer job opportunities and lower wages and benefits), and all shareholders (they pay in the form of lower profits). Even among shareholders, only some are wealthy.
On the whole, then, a rise to the corporate tax rate makes the tax code less progressive.
One of the most important and helpful aspects of former President Donald Trump’s tax reform was its cut to the corporate tax rate. It didn’t cause the wealthy to pay less, but it did cause big businesses to stop evading taxes by expatriating profits using what is known as “corporate inversions.” Corporate inversions essentially ceased after the 2017 tax reform passed. Corporate repatriation of earnings also increased massively, increasing the amount of capital available for investment within the U.S.
Ocasio-Cortez and President Joe Biden apparently want to bring back corporate inversions. We doubt that either of them could explain why if you asked them.
In the end, this is about Democrats being out of touch. No matter how edgy the dresses they wear to show off, they cannot deny that the U.S. tax system is the most progressive on earth, that the rich are well-taxed, and that the Biden tax hikes will shift a heavier tax burden back upon lower- and middle-income taxpayers.
Also, Ms. Ocasio-Cortez, if you’re going to demand that the help wear masks, at least wear one yourself.
