Fox Business’ solution to financial crisis: Tax the poor more
A recent report from the Congressional Budget Office shows that the gap between the richest one percent of earners in the US and the middle class has more than tripled since 1979.
But that didn’t stop Fox Business host Cheryl Casone from using the report as the basis of her proposed solution to the US’s mushrooming budget deficit: Increase taxes on the poor.
In a discussion on the CBO report (PDF), which showed that 40 percent of income tax filers ended up paying no federal income tax in 2007, Casone argued that fixing this “imbalance” would solve the federal debt problem.
“The fact that most [sic] Americans are not paying any income tax at the end of the day kind of shows the imbalance,” Casone said on Cashin’ In Saturday.”What if everyone pays just a little bit — we’re out of debt in this country.”
That idea was rejected by Christian Dorsey of the Economic Policy Institute, who pointed out that people who pay no federal income taxes still pay state and local taxes.
“When you factor in their local taxes as well as their state taxes, you find that the poorest 90 percent are paying almost the same share of total taxes as the upper one percent,” he said.
An analysis of the CBO’s report, carried out by the Center for Budget and Policy Priorities, shows that the income gap between the richest one percent of earners and the middle fifth “more than tripled” between 1979 and 2007.
The report found that:
Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation Ã¢â‚¬â€ an increase in income of $973,100 per household Ã¢â‚¬â€ compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth (see Figure 1).
If all groupsÃ¢â‚¬â„¢ after-tax incomes had grown at the same percentage rate over the 1979-2007 period, middle-income households would have received an additional $13,042 in 2007 and families in the bottom fifth would have received an additional $6,010.
In 2007, the average household in the top 1 percent had an income of $1.3 million, up $88,800 just from the prior year; this $88,800 gain is well above the total 2007 income of the average middle-income household ($55,300).
The CBPP analysis noted that the Bush-era tax cuts made the growing income gap even larger.
“Because high-income households received by far the largest tax cuts Ã¢â‚¬â€ not only in dollar terms but also as a percentage of income Ã¢â‚¬â€ the tax cuts have increased the concentration of after-tax income at the top of the spectrum,” the CBBP stated.
Zachary Pleat at MediaMatters described Casone’s news segment as “launching a class war against the poor.”
The following video was posted to the Web by MediaMatters.