Fair is fair

Posted: 6 July 2011 in Uncategorized
Tags: , , , ,

There’s no room for fairness in neoclassical economics. It’s all about individual choice and free markets.

There’s no fairness in Casey Mulligan’s call to lower the minimum wage. Or in John Taylor’s attack on any and all forms of government intervention in the economy. Or in Edward Glaeser’s definition of economics.

Alternatively, one can argue that neoclassical economists are obsessed with fairness but the only definition of fairness they can offer is what the free market produces. Massive unemployment, grotesque inequalities, growing poverty—all are “fair” because they’re the results of free markets.

Either way, the neoclassical idea of what is fair has nothing to do with the notion of fairness Bernie Sanders uses.*

At a time when the richest people and the largest corporations in our country are doing phenomenally well, and, in many cases, have never had it so good, while the middle class is disappearing and poverty is increasing, it is absolutely imperative that a deficit reduction package not include the disastrous cuts in programs for working families, the elderly, the sick, the children and the poor that the Republicans in Congress, dominated by the extreme right wing, are demanding. . .

Shared sacrifice means that it’s time for the wealthiest Americans and most profitable corporations in America to pay their fair share and contribute to deficit reduction.

Sanders goes on to argue that “Only in Washington is it considered a controversial idea to make the wealthy and large corporations pay their fair share.”

He might have added: “and in neoclassical economics.”

* More than 100,000 people have signed Sanders’s letter to the president.

Comments
  1. jonolan says:

    What’s their “fair share?” The top 1% earn 19% of the US income but pay 37% of the federal income tax collected. Expand that out to the top 10% and that larger group earns 33% of the wealth but pays 68% of federal income taxes, while the bottom 50% only pays 3% of them.

    • Magpie says:

      “The top 1% earn 19% of the US income but pay 37% of the federal income tax collected.”

      Just one tiny, little comment: I might be mistaken, as a I’m just a little guy from Oz, but I suspect “US income” is way larger than “federal income tax collected”.

      And as we in Oz love beer, a “beer coaster calculation” might come in handy here:

      By US income I suppose you mean GDP, which, give or take, is something around US$ 13 trillion; while federal tax income (including income, plus corporate, estate, excise, gift taxes, for good measure) reached some US$ 2.7 trillion in 2007.

      So, 19% of 13 trillion is about 2.5 trillion, while 37% of 2.7 trillion is a bit less than 1 trillion

      Sounds like a pretty good deal, to me: they still got around about the Australian GDP to party (Aussie GDP: AU$ 1.3 trillion, last year).

      • jonolan says:

        Magpie,

        Personal Income Taxes make up approximately 42% of the US federal government’s revenues which total about $2.16 Trillion per year. That is not the same thing as the GDP.

  2. David Ruccio says:

    “jonolan” is right, in a sense: the top 1% does pay a large share of federal income tax. But that’s only because (a) the top 1% has received a growing share of income growth over the past 3 decades, (b) corporate taxes have fallen as a percentage of total tax revenues, and (c) everyone else pays a lot of payroll taxes other than federal income taxes (such as social security and medicare, in addition to state and local income, sales, and property taxes). The result is that the United States does less than any other industrialized country to make the distribution of income less unequal after taxes. Thus, in the United States, while the income share after taxes of the top 20% (especially the top 1%) has gone up since the late-1970s, the share of income after taxes for everyone else has gone down.

    • jonolan says:

      You would be right, or somewhat close to right, if the context was total tax burdens. Since Sanders can only speak for federal taxes and everyone focuses on the Bush Tax Cuts, which were for personal federal income tax that is what I based my numbers on.

      I’m actually researching that tax burden by income strata but have have solid findings yet.

      • Magpie says:

        “Personal Income Taxes make up approximately 42% of the US federal government’s revenues which total about $2.16 Trillion per year. That is not the same thing as the GDP.”

        Well, I didn’t say $2.7 trillion was the GDP. What I did say was that GDP was about 13 trillion, Federal tax income (receipt, revenue), was about 2.7 trillion (including corporate, estate and other taxes)

        Anyway. Fair enough. I’ll take your figures.

        So then, in dollar terms, how much are “US income” and the 1% top income earners’s income tax contribution (regardless of percentage)?

      • jonolan says:

        The Top 1% are paying about $340 Billion in personal income tax per year on very roughly $1.3 trillion in annual personal income.

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