For most of the last three decades, tax rates for the wealthy have been falling, while their pretax pay has been rising rapidly. Real incomes at the 99.99th percentile have jumped more than 300 percent since 1980. At the 99th percentile — about $300,000 today — real pay has roughly doubled.
That he presents all this without a partisan edge — and with data from the Census Bureau and the
Congressional Budget Office to back it up – makes for a pretty forceful argument.
There are some pretty good details in those reports, too. “Capital income grows in importance at the very top of the distribution,” seems obvious enough. But the CBO gets granular with the data.
Interest, dividends, and realized capital gains accounted for 29.8 percent of pretax household income for people in the 99.5 through 99.9 percentiles, 42.6 percent of income for people in the 99.9 through 99.99 percentiles, and 55.9 percent of income for the 0.01 percent of the population with the very highest income.
Health care blogger Merrill Goozner promptly declared Leonhardt guilty of “overreach” this morning, pointing out that the legislation “also taxes middle class households (the so-called Cadillac-heatlh-plans tax). Moreover, it provides its benefits in the form of services, not wages, and none of it goes into effect for another five years.”
But Leonhardt seems to go him one better, pointing out that he knows the limits of the case he’s making:
Health reform hardly solves all of the American economy’s problems. Economic growth over the last decade was slower than in any decade since World War II. The tax cuts of the last 30 years, the two current wars, the Great Recession, the stimulus program and the looming retirement of the baby boomers have created huge deficits. Educational gains have slowed, and the planet is getting hotter.
For more on the slow growth of the past decade, dig into a long magazine piece Leonhardt wrote last year. That story concluded this way:
When Washington sets out to rewrite the rules for the economy, it can pass new laws and shift money from one program to another. But the effects of those changes are not likely to be merely the obvious ones. The changes can also send signals. They can influence millions of individual decisions — about the schools people attend, the jobs they choose, the medical care they request — and, in the process, reshape the economy.
That’s true about rewriting the rules for health care, too. “The effects are not likely to be merely the obvious ones.” Kudos to Leonhardt for pointing it out.