In Defense of the Wealthiest One Percent

On Thursday, President Bush sent his tax-cut plan to Congress, and it was met with an immediate chorus of class-warfare yelping from the Democrats. House Minority Leader Dick Gephardt led the pack, complaining that Bush's tax cuts will go to "just the top 1 percent" and warning that "working families" will get "stuck with the entire bill."

I have never heard a more outrageous set of lies uttered by a politician -- and that's saying something.

The most trivial of Gephardt's lies is the claim that tax cuts benefit "just" the wealthiest. Bush's plan would cut taxes for everyone and cuts them most for the poor; married people filing jointly, for example, could make almost $25,000 a year and pay zero income taxes.

That leads us to Gephardt's more flamboyant lie: the idea that the poor and middle class are somehow "stuck with" the majority of the tax bill -- the idea that the wealthiest 1 percent are somehow getting away without paying taxes.

This claim outstrips any distortion of the truth uttered by Bill Clinton. In reality, the wealthiest 1 percent pay a vastly disproportionate share of the nation's taxes. They are the ones who foot the bill for all the perks and pork that everyone else demands.

Consider the facts.

In recent years, federal taxes have grown to the highest level since World War II. But it's not the poor and middle class who shoulder most of this burden; their personal income taxes have actually dropped. A study released last year by the Congressional Budget Office reveals that the middle one-fifth of taxpayers, with an average income of $39,100, pay just 5.4 percent of their earnings in federal income taxes. The poorest third of wage-earners pay no income taxes at all.

But what about the wicked wealthiest 1 percent? According to IRS figures, these people pay an average personal income tax of 27 percent -- five times the tax burden of the average worker.

But looking just at percentages doesn't give us the full story. The straight dollar amounts are even more lopsided. The wealthiest 1 percent -- a tiny group of people -- pay more than $240 billion per year, nearly one-third of all federal income taxes. If we include the wealthiest 10 percent, the whole group forks over more than $460 billion, roughly two-thirds of all income taxes. And the wealthy are the only group whose tax burden has increased over the past decade.

How about the vaunted poor and middle class? The prosperous middle class -- those who make more than the national median but less than the top 10 percent -- makes 45 percent of the nation's income but pays only a third of its income taxes. And the entire bottom half of the nation's wage-earners pay a measly 4 percent of the total.

(These people don't exactly get off scot-free; every taxpayer gets walloped with enormous payroll taxes for Social Security and Medicare -- a program designed and defended by Democrats.)

The facts are clear. Our current system shifts the majority of income taxes away from poor and middle-class voters, preferring to confiscate the wealth and earnings of a small, politically defenseless minority. It is designed to balance the budget on the backs of the rich.

But it gets worse. The rich have not only balanced the budget; they have given our politicians an enormous, multi-trillion-dollar surplus to wallow in. And what do they get in return? They are told, by people like Gephardt, that they aren't paying their fair share and don't deserve a tax cut. No, say the Democrats, tax breaks should go to everyone except the one group that is actually paying most of the bills.

Why doesn't anybody care about this injustice? That brings us to the worst of Gephardt's lies: the idea that the wealthy are not "working people."

The wealthiest 1 percent includes the most productive people in America -- the entrepreneurs and executives who direct the course of the nation's businesses. These people work hard and shoulder enormous responsibilities. They provide the knowledge, the entrepreneurial energy, and the investment capital that drives our economy. Yet they are vilified as idle swindlers by the left -- and the right is too timid to defend them openly.

The president has been pushing for his tax cut on the grounds that it will boost the economy, which is true. But he should also fully embrace the reason he gave during his campaign: cutting taxes for the wealthiest 1 percent is the right thing to do.

Robert Tracinski was a senior writer for the Ayn Rand Institute from 2000 to 2004. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead. Mr. Tracinski is editor and publisher of The Intellectual Activist and TIADaily, which offer daily news and analysis from a pro-reason, pro-individualist perspective. To receive a free 30-day trial of the TIA Daily and a FREE pdf issue of the Intellectual Activist please go to TIADaily.com and enter your email address.