Does the “99% vs 1%” Slogan Make Sense?

~ Clarissa

Reader n8chz says on the subject of whether the “99% vs 1%” slogan makes sense:

I take it as a political statement that the middle class have more interests in common with the lower class than with the upper class.

My question is, really? Is this a convenient myth we are telling ourselves, or is this actually true?

There is a grievous lack of a social safety net in this country. Let me remind you, however, where the money for this social safety net comes from in the countries of Western Europe and in Quebec that have it. It is financed by the very high taxes paid by the middle class.

In Sweden, the income tax rate is 57.7%. In Germany, it’s 42%. In Belgium, it’s 50%.

We like to pretend that if we prevent the hedge fund managers from paying smaller taxes than they should on their investments, that is going to make a massive difference to the economy. It’s all a convenient illusion, though. Every more or less socialist system in existence right now is based on taxing the middle class heavily.

This is precisely why the #Occupy movement is so invested into promoting the myth that we are all 99% and that we have the same interests and goals. You can nationalize every single private jet and every single private island in this country outright, however, and that is not going to finance a passable social safety net even for as short a time as the next 50 years.

It’s so much fun to protest and wave catchy slogans on Wall Street while feeling like you are bravely fighting for the cause of the dispossessed. It is a little harder, though, to agree to be taxed at the same rates that one’s Western European and Quebecois sisters and brothers do.

I have a question for my middle class readers. Are you willing to give away between 50% and 60% of what you make in taxes to pay for the universal free healthcare, very cheap or free higher education, very high unemployment benefits, free amazing daycare for the poor, etc.?

Published by Clarissa

40 thoughts on “Does the “99% vs 1%” Slogan Make Sense?”

  1. I’m very certain you have your facts wrong. The UPPER tax brackets pay up to 45% of their income to taxes, but the middle class pay a lower percentage.

    This is how a progressive tax works. I know you had expressed some confusion about progressive/flat taxes earlier, but almost all -sorry to use outdated terminology- 1st world countries have progressive taxes.

    Occupy is not always about universal free health care but about redistributing the wealth. Right now the middle class is disappearing all together. To put it simply the rich are getting richer and the poor and middle class are not. The United States government has done much to fuel this distribution of wealth. For example there are huge tax breaks on people who own more than one home, who get income from hedge managing, etc. And the wealthy pay a lower percentage than they used to thanks to the Bush tax cuts.

    The Bush tax cuts and the war are the major force behind the deficit, and the answer to the deficit has been to cut programs. Hurt the poor to feed the rich (when they would have been pretty well fed anyways). That is occupy’s problem.

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  2. If you have data that says otherwise please show me by the way. But I’m very certain socialist countries tax everyone heavily, but tax the rich at the very heavy rates, 60%, 50%, that you suggest.

    They do not tax the middle class the most as you suggest.

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    1. I’m sorry, but you haven’t read the post carefully. I never said socialist countries tax middle classes the most. They survive on taxing the middle classes because they are more numerous.

      Of course, the taxation in all developed countries is progressive. That’s obvious. However, a middle class person in Sweden, Quebec and Germany pays a lot more in taxes than they would in the US. That’s also obvious.

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      1. “I’m sorry, but you haven’t read the post carefully. I never said socialist countries tax middle classes the most. They survive on taxing the middle classes because they are more numerous.”

        I took a look at data provided by our Federal Statistical Office and found out that in 2007, the top 10% paid more than half of the income tax and the top 1% paid 20% of the total income tax. So it looks as if Germany is not a good example to prove your point.

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        1. My point, Tim, is that middle classes pay a lot less in taxes in the US and in Germany. However, this simple point is turning out to be either very angering or very elusive for many people. I wonder why that is.

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      1. I a) talked to people and b) Googled it.

        I’m not sure what we are arguing about here. That the middle classes are taxed in the same way in the US and in socialist countries? That is so patently untrue that I don’t see a point of debating it. In the US, a college professor and a financial analyst are taxed at 11% and 12% respectively. This is absolutely not how things are even as close as Quebec, let alone Sweden.

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    2. I see a huge resistance to answering a simple question, which is an answer in itself, I guess.

      Once again, middle classes are taxed a lot more heavily in all countries with a strong social safety net than in the US. Are people prepared to pay 2 or 3 times more in taxes than they do here?

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  4. I don’t think the issue is hoping to turn into Western Europe. The thought many have in mind involves going back to tax rates operative here 35 years ago or so (maybe more, maybe less, depending on what goal you want to hit). With taxes at *those* levels, it would be possible to do a lot more than now (and was possible in those days) – especially if Pentagon budget were cut.

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    1. Z, I’m all for cutting Pentagon’s budget. I’m also in favor of world piece and universal love. This is not the subject under discussion here, though. We all want a stronger social safety net. My only question in this post is whether people are prepared to give away as much as their peers in socialist countries do to finance that social safety net.

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      1. What do you mean by socialist countries? You are comparing apples and oranges and it isn’t easy to compare US even to Western Europe, which you may call “socialist” but which I hardly would. And why do you think this is what the occupy movement is about, anyway? What are you smoking?

        I repeat: what they are explicitly talking about is rolling back the tax cuts that have been made *here,* to rates that have been operative *here* within recent and living memory.

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  6. So for fun (and procrastination), I decided to run some quick numbers.

    According to wikipedia, and the old US census numbers (2005; http://en.wikipedia.org/wiki/Household_income_in_the_United_States), 18.63% make less than $20k/year, 78.5% make between $20k/year and $200k/year, and 2.87% make more than $200k/year. I’m going to call those my poor, middle class, and rich divisions just for the sake of argument (I figure I make $30k/year on my science grad student salary, and live comfortably, but making 2/3 that would be pretty tight… and the tenured faculty I know who make ~$150k/year can afford 2 houses, so we’ll go a notch above that for “rich”).

    I then also looked at the income tax rates (for single folks; http://en.wikipedia.org/wiki/Income_tax_in_the_United_States), and the poor would be taxed between 10-15%, middle between 15-33%, and rich 33-35%.

    So, for the purposes of *underestimating* how much the rich contribute, I’ll assume everyone who is poor makes the upper limit, and everyone who is rich makes the lower limit, and the middle class makes the national median from 2005 ($44,389/year), which for the 2011 tax brackets these groups would pay 15%, 25%, and 35% of their annual income.

    Crunching the numbers, the poor would be contributing 2% of the total funds collected by the feds that year, the middle class would be contributing 30%, and rich would be contributing 68%.

    So this rough estimate tells me two things: (1) the rich are already contributing a large fraction to the funding of the government, and (2) a small tax increase on the rich would actually make a fairly substantial increase in the total funds collected by the government.

    Pushing this to the extreme, if we wanted to eliminate the middle and lower class’s taxes entirely and still pull in the same amount of money in taxes each year, we’d have to up the taxes on the rich to ~55%.

    Now this of course neglects many things (tax rates on families, write-offs, corporate taxes, etc.), and it’s up to the readers to figure out for themselves what is “fair”… but it’s at least an informative starting point for discussion since it assumes the rich pay all their taxes (and don’t just pay lawyers to find tax loop holes) and is biased to *minimize* how much the rich are paying.

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  7. Anon, though, the point is that the richer you are, the easier it is to avoid taxes or show a loss, and corporations / the superrich (not just those above 200K in salary) keep having taxes cut.

    Also remember, “taxes” aren’t just income taxes.

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    1. I know- note that I did not make any personal judgement statements on whether the above is fair, I was interested in the idea of whether or not taxing the rich at a higher rate would or would not make-up for lower tax rates on the poor (assuming the rich paid them, of course)… and the answer is a resounding yes, I think.

      So I guess to directly answer Clarissa’s question: yes, I would be willing to accept a slightly higher tax rates (not quite European-higher, but perhaps the average between the european and american rates?) to help create a better social safety net. The key being to make sure the new system is not rife with loopholes and write-offs that make it easy for rich people and corporations to keep less than their tax rates.

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      3. “Thank you! Finally somebody managed to give a concrete answer.”

        Ha!

        Yeah, the point of me going through all the math was to convince myself that tax increases would actually help, and to investigate the idea that just increasing the taxes on *just* the wealthy would or would not be “enough”. Seems like increasing taxes on the upper class would go a long way… now to figure out how much we actually need to see how much more the middle class would need to contribute as well… but I think I’ve done enough math for the day. 🙂

        Someone else up for an order of magnitude calculation?

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  9. yes, absolutely. I’ve lived in Norway and in the US, and it’s worlds of difference in how people’s lives are lived. Here in the US, if I break my leg at a bad time, that’s the difference between living alright and not being able to afford a place to live. My Scandinavian friends literally cannot understand the insecurity that rules my life and the lives of most of the people that I know.

    If I could live in a world where my after-tax paycheck is paltry but 1) I know that I’ll be okay in a crisis and 2) most of the money left is mine to spend as I wish – rather than on this insurance, that insurance, all these things that aren’t paid in common through taxes in a socialist country – if I could live in that world, I’d have a better life, I believe.

    For me, this kind of a society that watches out for people is worth the cost. However, it’s completely inappropriate for the United States, given our character and history.

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    1. OK, that’s an answer I understand and respect.

      I also have lived in both kinds of societies. Here, in the US and in Quebec. For me, here is better because there I didn’t feel like my hard work was valued by the society at large.

      But I’m not a US citizen so my opinion doesn’t matter. This is why I’m trying to find out how people here feel about paying out 40%+ of their earnings in taxes.

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  10. The raw income tax isn’t the only issue, consider the UK:

    20% basic rate
    12% national insurance on income £139-817 per week, 2% over this (so most pay 12%, higher rate earners get a discount on the rest)
    20% VAT (sales tax)
    ~£120 a month in council tax / water bills

    So your average on £25,000 a year pays ~29% tax basic (including exemptions) and then a 20% sales tax on the rest (14.2%) for a tax total of around 41.2% of their income going in taxes.

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  11. My answer is, if I were middle class, I would *gladly* pay more taxes to ensure safety and security of my fellow citizens during a time of financial crisis. My answer is largely informed by my activism in the LGBTQ and disability communities, because traditionally, queer people are significantly more likely to face discrimination in housing and job applications and therefore be homeless and unemployed, 26% of queer youth who come out to their parents are asked to leave their parents’ homes, and far too many are forced into sex work in order to make a living.
    In the disability sphere, I had friends who ended their own lives rather than being forced to go into institutions when funding for independent living was slashed in Montana. I’ve also known people who were forced to live with relatives who abused and neglected them because there was literally no other option available.
    At the moment, we are failing people like those who slip through the cracks of the social welfare system, and if gritting my teeth a bit more during April and seeing a bit more taken out of my paycheque is what it would take to make sure those stories were not a regular occurrence, I’d do it.

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    1. Basically, what nominatissima said, with a minor qualification. I’d say that, with 99% probability, I’d be very happy with being taxed out of half my paycheck if my paycheck were north of 50 or so, assuming of course the lion’s share of the budget went to, um, civilian programs. I say 99% probability because the highest annual income I’ve logged so far was just north of 17, and as a matter of principle I only give hypothetical answers to (for me) hypothetical questions. I’d feel absolutely honored to finally have the opportunity to pay my fellow citizens back for the Pell Grants I consumed back in the eighties (like I sed elswear, I absolutely do not envy the younger generations). At this point someone must be asking what the hell right do I have living the starving artist life. I’m almost tempted to counter by saying that my autistic credentials are quite solid (i.e. clinical) but so is the self-confident, highly professional Clarissa, so I’m willing to accept being categorized as an example of poor character. There’s also the question of whether I’ve permanently torpedoed any hope of a career by blogging my real opinions under my real name, for which of course I have only myself to blame.

      FWIW, I’m not a big advocate of social democracy. Rather than European-style safety net programs, I’d rather see New Deal-style “make work” programs. Yah I’m not stupid and know that a charity hire is 100% charity and 0% hire, but if a mom or dad can come home to the kids FROM WORK rather than from years on end of pavement pounding, do not at least the children deserve this modicum of dignity?

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      1. ” There’s also the question of whether I’ve permanently torpedoed any hope of a career by blogging my real opinions under my real name, for which of course I have only myself to blame.”

        -You write very well, so I think this will only improve your chances.

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      2. At this point someone must be asking what the hell right do I have living the starving artist life. I’m almost tempted to counter by saying that my autistic credentials are quite solid (i.e. clinical) but so is the self-confident, highly professional Clarissa, so I’m willing to accept being categorized as an example of poor character.

        Well, this kind of attitude pertains to Bataille and to his notion of “sacrifice”. And Bataille was following Nietzsche: “A god who came to earth should do nothing but wrong.”

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  12. “I don’t understand the level of aggression here. I say “soicalist” as shorthand for ‘countries with a strong social safety net”.”

    OK. I was impatient with what seemed like a vague and also misleading question. Part of my problem with this post is that by “taxes” you seem to mean Federal income tax. There’s also state and city income tax, property tax, sales tax, capital gains, various business taxes, etc., etc.

    OK, so Germany. I’d hardly call that a socialist country. But yes: I would much rather live in Germany under their wage/tax/social safety net system than here, under ours.

    But where I think you are confusing people is that they read: do you want your income tax doubled, trebled, quadrupled? And they are thinking: well, will there really be public transportation so I won’t need a car, will I really get free health care, what about all the taxes other than income tax I am paying now, what will it really be like not to have to save for college for the kids, etc., etc.

    So, the question you’re asking is more complicated than you realize and one almost needs to make a spreadsheet to answer sincerely. It’s easy to say yes in principle, but to the question, can I afford to pay *a lot* more in Federal income tax this year without taking on debt to do so if salaries stay flat and inflation continues, the answer is probably not – I’d have to take on debt – but maybe not if the social safety net covered retirement and health insurance, and perhaps surely not if the large rise in Federal income tax were accompanied by a reduction in other taxes.

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  13. Here’s a useful table from the OECD comparing the percentage of taxes paid for an average worker in different countries. In the US, it’s 29%, versus 31% in Canada, 41% in Denmark, 50% in France, and 52% in Germany.

    To answer your question directly: I’d trade our tax rate for France’s in a second if we got France’s health care system along with it. 50% of income going to taxes, in exchange for the security and efficiency of the French system, is an excellent deal.

    However, it’s a little bit deceptive to compare directly like that, because it doesn’t account for how much more Americans pay for health insurance in after-tax spending. Right now, my health insurance takes up much more of my after-tax earnings than would be true for my similarly-healthy counterpart in France. It would be better to compare the US’s average tax+health care burden, which would be (I’m guesstimating) around 37% — still cheaper than the countries with good health care, but not by as large a degree.

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  14. On the whole, I’d prefer to live in a society where common ownership of the collective product of labour was the rule. In the USA, the top 10% of the population control/own 88% of the wealth which 90% of the population produces. I’d prefer 100% of the wealth be owned by 100% of the people. Of course, such a society doesn’t exist now nor has it ever existed; still, it is what I would prefer.

    I now live in Australia, which I prefer to the country I was born in, the USA. In Australia, citizens have access to Medicare from birth. Still, in Australia the top 10% own/control 45% of the wealth while the bottom 50% have access to only 7% of the nation’s wealth.

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    1. ‘On the whole, I’d prefer to live in a society where common ownership of the collective product of labour was the rule”

      -That society would die out of hunger pretty soon, but people are entitled to their own preferences, I guess. 🙂

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      1. The way I see it, lots of people are dying of hunger right now because food is a commodity and commodities are rationed by how much money you have in your possession and for most of us that means whether you’ve been able to find a capitalist or a political State to sell your skills to. The commodification of food works out to be just another barrier and means of ensuring certainty of political control by the powers that be over the majority. Same goes for housing and the question of homelessness. Every year about as millions of children die because they lack access to clean drinking water….and why? Because they live in class dominated societies which cry poor when confronted with the proposition that the wealth created by the workers be used to surmount the commodity barriers to obtaining clean drinking water.

        It’s all rather like climate change in this respect: the commodity is what stops us from halting climate change until ways can be found to make stopping climate change profitable. The science is in and the technology is there; but the so-called ‘political will’ is absent without commodification.

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    2. Hey Mike B, love your blog. I wanna put it in my blogroll but my blogroll is based not on what I like but on what’s “on topic” relative to my blog. In that spirit I ask, what’s your opinion concerning the Invisible Hand?

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      1. I think the ideologists who promote the ‘Invisible Hand’ are putting invisible handcuffs on workers, work and working conditions. Our ruling capitalists love it when workers volunteer to lie down on their Procrustean bed. And so all the yammering from the amplified voices of Capital about how wage-slavery is freedom drones on…..

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  15. The Invisible Hand is a useless, very naive concept that is based on the idea that people are driven by self-interest. I thought we’d reached a more complex understanding of human beings to rely on such childishly simplistic concepts.

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  16. I was adding up after reading this post and the responses. I am a tenured professor of mathematics whose salary is still less than the average full professor salary at my institution, according to AAUP figures. My total tax bill comes to about 38% of my income.

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      1. Mostly. Income tax plus property tax. Delaware’s income tax is around 6% or so. But my property taxes are less than 1% of my income. I was including FICA at 6.3% and Federal and State income taxes.

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