It seems Obama is hitching his re-election wagon to the Class Warfare/Income Inequality meme and at least weekly we see speeches like this one where he says the only way to get out of this financial mess is to tax the wealthy that need to pay their fair share. The implication being that the wealthy have some sweetheart deal with Washington DC and use politicians to do their bidding and increase the wealth.
But is that true? Sure there are examples of fat cats using crony capitalism to benefit their business and personal wealth but, on average, does our Federal government pass more laws that hand out money to the Wealthy versus laws that provide assistance to the poor and middle class?
Let’s take a look at how the US government spends their money and what share of the tax revenue that the wealthy pay to see if that is true. If the wealthy controlled government then entitlement programs would see their funding cut and the percent of tax revenue paid by the wealthy decreased (shifting the tax burden to the poor).
That’s what Obama seems to be saying here:
“Let me ask you, what’s the better way to make our economy stronger?” Obama told an enthusiastic crowd in Boca Raton, Fla. “Do we give … tax breaks to every millionaire and billionaire in the country? Or should we make investments in education and research and health care and our veterans?”
To see if this theory is true we need to graph various spending that the poor or middle class benefit from (Welfare, Social Security, Education and Healthcare) and compare that to the percent of tax revenue that the wealthy (which I define as those making over $100,000 per year) contribute.
For the spending data, I’ll use constant 2005 dollars to normalize for inflation and use the metric “spending per capita” to normalize to population increases. This data can be obtained from the following links:
Welfare – here
Social Security – here
Education – here
Healthcare – here
The IRS data showing what percent of total tax revenue that each income demographic contributes is obtained from this link and only goes back to 1996 and runs through 2009 so that is the time period I’ll use for our comparison.
Here are the graphs for Welfare, Social Security, Education and Healthcare spending compared to the share of tax revenue that the wealthy contribute.
From these graphs we see that spending for programs benefiting poor or middle class citizens have increased and the percent of tax revenue contributed by the wealthy has increased at similar rates. You can say that the tax burden on the wealthy has increased to pay for the government assistance for the poor and middle class. This is hardly evidence that the wealthy control government because we’d expect the exact opposite to occur!
And if you think this increased spending on Welfare, Social Security and Education is a recent phenomenon, here are the spending graphs since 1970.
Entitlement spending has been on this unsustainable trend for decades and this is why we have a spending problem and not a revenue problem in the United States. I’ve shown previously that the rich pay more than their faire share so this “Fairness” argument of the Left doesn’t hold up when the data are analyzed. The Heritage Blog has also shown that the top 10% of earners account for 71% of all tax revenue so you can’t say they aren’t paying their fair share.
The US Federal government is not controlled by the wealthy and from the data it can be deduced that the poor and middle class actually control spending because they get more of the money while contributing little to nothing in taxes.