12/06/2012 03:10 pm ET Updated Feb 05, 2013

Think Again: Will the Times ' Terrific Tax Reporting Matter?

My "Think Again" column last week addressed how conservative politicians' professed theories about job creation in the (endless) process of seeking tax cuts for the wealthiest Americans are in direct conflict with real evidence of the actual behavior of individuals. I demonstrated this disjunction using the observations of conservative economists, 65 years of evidence as compiled by the Congressional Research Service, and the behavior of America's most successful investors. A few days after my column was published, The New York Times published an extraordinary set of articles on tax policy as it actually exists in the United States--beneath all of the politicians' rhetorical posturing and the all-too-frequent unquestioning and superficial press coverage.

Totaling more than 17,000 words over a four-day period, the articles will likely be too long and dense for all but a miniscule fraction of the paper's readers, which already comprise a tiny fraction of the voting public. But even if merely its "takeaways" were to permeate our political debate on tax policy, virtually the entire conservative case for coddling the wealthy--or the "job creators," as conservatives like to call them--would instantly disappear.

By far the most important point of the four articles is that, when viewed as an entire ecosystem rather than simply a collection of behavior- and sector-specific interventions, the U.S. tax system is vastly more generous to the wealthy than is commonly understood. Contrary to what many people believe--no doubt based in part on the right-wing propaganda to which they have been consistently subjected--"most Americans in 2010 paid far less in total taxes--federal, state and local--than they would have paid 30 years ago," according to an article on tax rates in the 1980s and today by Binyamin Appelbaum and Robert Gebelof. The only Americans who pay more--surprise, surprise--are the working poor.

According to Appelbaum and Gebelof:

Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.

Meanwhile, barely half of working families with annual incomes below $25,000 could claim the same.

These results are primarily the function of two trends: the fall in federal tax rates and the rise of state and local taxes that are not income-based such as sales taxes. Only in six states, however, were these increases equal to or greater than the drop in federal taxes, so most Americans got an overall tax break--"most" Americans, that is, except the ones who needed it the most, those who would also be most likely to spend it.

Another part of our tax policy problem comes from an increasing reliance on the payroll taxthat helps pay for Social Security and Medicare, among other programs. Until the recent 2011payroll tax cut, it rivaled the income tax with respect to the bite it takes out of most middle-class incomes, but it is decidedly more regressive. As Appelbaum and Gebelof note:

All workers pay the same Social Security tax on wages below a threshold, which stood at $106,800 in 2010. The Medicare tax imposes a single rate on all wages, without a threshold," and therefore hits wage-earners and the rest of the 99 percent with a wallop that the wealthy barely even notice.

Another tax policy article in the Times, written by Louise Story, tells a maddening tale of the casual manner in which corporations pressure politicians to bilk taxpayers on their behalf. These corporations, however, are not able to provide virtually any evidence--much less a guarantee--that the jobs promised as a result of specific tax rebates and credits given to specific businesses will ever materialize or even remain in place long enough to provide sufficient revenue to offset the lost funds. Story notes, for instance, that as recently as 2007 General Motors was promising local officials that generous tax-abatement schemes would "further G.M.'s strong relationship," vowing a "win/win situation" to one town council in Michigan, according to notes that a participant took at the meeting. Just two years later, more than 50 properties, including this one, showed up on the company's 2009 liquidation list, meaning that billions of dollars in taxpayer funds were given away to General Motors in exchange for pretty much nothing.

In some of these cases, Story reports, the company shut down its properties despite offers of even more generous treatment, as states and localities were apparently eager to find themselves fooled yet again. Ohio, for instance, offered $56 million to try to rescue a GM plant in Moraine, while Wisconsin offered nearly three times that much in a failed attempt to save another one in Janesville. In 2011, meanwhile, states cut public services and raised taxes by a collective $156 billion, according to the Center on Budget and Policy Priorities.

Because of the myriad ways in which states, cities, or towns give corporations money, it cannot always be traced, so no accurate figure is available for how much money we taxpayers actually turn over in exchange for often-empty promises. What's more, nobody keeps track or even tries to measure the success rate of these gifts. The best the Times investigation could come up with was about $80 billion total given to companies from "virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains."

The newspaper attempted to analyze more than 150,000 awards and created a searchable database of incentive spending. Journalists also interviewed more than 100 people involved in and aware of such deals on both sides of the cash transfer. In each case, mayors, governors, town managers, and city- and state-council officials engaged in the transfer of public assets to private hands amid considerable pomp and circumstance--with few, if any, enforceable provisions to regulate the deals on the private side.

In many of these cases detailed by the reporters, schools and other public goods in these same localities suffered from slashed funding. And no wonder

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