CNBC's Pitying the Billionaire

        Just in case you thought you haven't heard enough poor little rich boy stories-like those Mitt Romney donors in the Hampton's who wail 'why doesn't my chauffeur understand me?'- CNBC has a new one. While the piece tries to put out a facade of journalism it's on the level of something out of the Cato Institute.
 
        Turns out the 1 percent are really suffering, really! It's a worry. Forget about the jobless, let's just cut the wealthy's taxes yet again:

        "The presidential election has given us two myths about the rich. First, that their incomes, and income inequality, are at all-time highs. Second, that the wealthy pay less in taxes than ever, and lower taxes than the rest of us."

        http://www.cnbc.com/id/48257611

         Now where would this "myth" come from? There's Mitt Romney who paid 13.9% in 2010-in truth lower as he didn't submit all his information even that year it turns out. We know that Chevron pays no taxes. The effective tax rate on the rich is only 17.2%. Yet, they are overtaxed!

         Then we hear the urban legend that '45% of Americans pay no taxes' which is a damned lie-they ignore the payroll tax, and state income, property, and sales taxes. Actually one of the more noxious ideas out there is that the rich are the ones who pay most of the taxes. What's strange is that these same people who say this also claim that raising taxes on the rich alone won't work as there are too few of them. If there are too few of them to make a dent in the deficit, then they aren't enough to pay most of the taxes either. It's one or the other.

        I like CNBC, but they should realize they are the last one who needs to be doing such propaganda pieces-it seems just a little too convenient.

        "Let’s consider income first. Between 2007 and 2009, after-tax earnings by Americans in the top one percent for income fell 37 percent. On a pre-tax basis they fell 36 percent in the same period."

         Well millionaires and billionaires have lots of money tied up in equities,, etc. and there was a major market drop. How did things go since then? Indeed, they concede that they might have gone better:

          "the incomes and tax rates of the wealthy may have jumped back since 2009, with the rebound in financial markets."

          Exactly. We then saw them make record profits. The piece makes other wild claims:

          "The One Percent paid an average effective tax rate of 28.9 percent on their income — far more than any other group, and more than twice the average effective rate of the middle class, who paid 11 percent on average."

           Again, these numbers are 2007-2009, and I certainly am very skeptical of them. When you figure out the effective tax rate you must include payroll taxes and also the state taxes and fees-really tolls, traffic tickets, and car insurance ought to count in the tally.

         If you were to factor in all this I very much doubt the rich pay the highest effective tax rate. Everything we know suggests the opposite. Maybe Mitt Romney can help us out by releasing his tax returns.

        P.S. Here is what the Tax Foundation says:

        "income tax rate starts to fall again at the very top of the top 0.1%. The 400 top earners in America, for instance, had an average effective tax rate of 18% in 2009. That’s because the super-rich, like Buffett and Romney, derive more of their income from investments rather than salaries. Capital gains and dividends are taxed at 15% rather than the top rate for ordinary income of 35%."

        http://blogs.wsj.com/wealth/2012/01/17/romneys-new-tax-rate-problem/

         So the real problem is that capital gains and dividends are wildly unertaxed. There's this illusion that making capital gains taxes lower is important for capital formation. If so, why was all that capital formed in the 90s?