[The Goat]

This article looks like it came out of the WSJ Editorial board rather than the WSJ. There's a huge difference. The editorial portion is pure shit, not journalism, and it's been that way for decades. The actual WSJ is high quality.

I say the article looks like editorial because it says editorial at the bottom and because it refers extensively to the voodoo economics known as supply side. Bob Bartley, the most famous chief editor of the WSJ editorial, was a major advocate of supply side (along w/ Jude Wanniski). Believe it or not supply side has never been an economics based theory. Bartley and Wanniski said tax cuts for the rich, beyond JFK's in the early sixties, would yield so much in tax revenue that America would see a budget surplus. Economic studies have shown GDP would have to grow by 10 to 12 percent (annually) to achieve surplus alongside Reagan's tax cuts. Any idiot who pays even the least bit of attention to public policy knows that each time supply side tax cuts have been implemented the budget collapses into deficit. When Reagan took office the US gov owed about $1 trillion. Reagan's supply side policies added over $3 trillion. The two Bushes have added most of the other $6 trillion to take our current national debt to $10 trillion. The only brief reprieve from massive budget deficits came from the economic team of the 1990's (Summers, Rubin, Sperling) - not really Bill Clinton.

As to the merits of the article, there is no there there. All good macroeconomics is founded in microeconomics, and to get at the micro picture you've got to ask what percentage of household income is going to the federal government. Sadly, the percentage of household income among the working poor (blue collar, service sector, etc) has climbed dramatically over the last 3 decades to have nearly doubled. Think about out social security was saved in the 80's. The tax was doubled for W-2'd workers. If you're wondering how this group is somehow paying a lesser portion of income taxes, it's because they're earning significantly less real income than 30 years ago. The real income, when adjusted for inflation, has fallen for blue collar and service sector workers. Meanwhile, the percentage of household income taken away from the top decile in the form of taxes is lower than at any other time since WWII (when the modern tax system was implemented). Again, if it seems curious that this group is now paying a larger percentage of income taxes, all you have to look at is their enormous gain in real income. At the micro level, where it really counts, the poor are paying more than ever before (percentage of household income) and the rich are paying less than any time since WWII (percentage of household income).

Lastly, the WSJ editorial here is pure bullshit for an entirely different reason. Notice it talked about income taxes and not payroll taxes. Most families (4 out of 5) live w/ the payroll tax, levied at 15.3%, as their primary tax. The income tax only accounts for about 10% of what the median family pays in total tax. In simple terms, the editorial completely ignores the tax paid by the vast majority of American households. This is a slick little way of distorting the reality, but it's not a new trick by any means. The reason we can say that the bottom 50% of workers paid just 2.9% of the income tax is because they don't make enough to pay much in income tax, but you can be quite sure that they're not escaping the payroll tax which is counted separately.