CONFLATING STOCKS AND FLOWS.

Tax-'n-spend Democrats have control of the presidency^* and both houses of Congress, and they're all about wanting to make the wealthy pay their fair share of taxes.  Perhaps  I'm too much the purist, expecting an incidence analysis to stratify tax receipts by income quintiles (deciles would be better, but that's how the empirical research goes) and then, with something resembling a good estimate of the share of taxes paid by the higher income earners, we could have a good common-room lunch session about what share was fair, or not.

That's not how things work in practice.  Rather, you get populist froth.  "The share of the nation’s wealth pie owned by the richest 0.01 percent has quadrupled over the last 70 years. Their percent of the total tax obligation has stayed the same. What’s wrong with this picture?"  Oh, there is a picture.

Retrieved from Common Dreams.

That's not exactly an incidence analysis, although the authors attempt something.

To find the percentage of the total national taxes paid by the top .01 percent in a given year, we first multiplied the overall tax rate of the top .01 percent by the overall income share of the top .01 percent. This gave us the percentage of total national income paid by the top .01 percent in tax. We then divided that by the percentage of total national income paid by the entire population (top .01 percent included) in tax to get our final “tax share” of the top .01 percent.

Then, we compared that “tax share” of the top .01 percent, year-by-year, to the share of the nation’s wealth held by the top .01 percent, again piggybacking on the work of Professors Saez and Zucman.

Fortunately, researchers at the Internal Revenue Service, who know something about where the money comes from, are more careful.

Pick your calculation: the top one-hundredth-of-one-percent of income earners pay about four percent of all taxes, or the top one-tenth-of-one-percent of income earners pay close to one-fifth of Federal taxes.  Is that a fair share on a flow basis?

In the populist world, evidently a different notion of fair share is in play.

Consider what’s transpired over the past 70 years. The tax share of the top .01 percent changed over time, but it’s not far today from where it was in 1953 – about 5 percent. The wealth ownership share of the top .01 percent during that period about quadrupled, from 2.5 percent to very close to 10 percent.

For the rest of us, the bottom 99.99 percent, our share of the overall tax has been about equal to our share of the nation’s wealth, slightly less than our share of the nation’s wealth 70 years ago and slightly more than our share of the nation’s wealth today.

The situation 70 years ago made sense. It adhered to the principle that tax payments should be based on the ability to pay, with those at the top bearing the heaviest burden relative to their wealth. Thus, the very wealthiest segment of a society should pay a share of the total tax burden greater than its share of the society’s wealth. The situation today turns that basic moral principle on its head. When the share of tax payments made the wealthy are one-half their share of the nation’s total wealth, such that they’re bearing the lightest tax burden relative to their wealth.

That’s not paying their fair share. Or anything remotely close.

Gosh, there's such a thing as accumulating wealth? Perhaps that's another common-room conversation for another day.  Even before the ukases most of the developed world submitted to a year ago transferred a lot of wealth to people owning information technology companies, there were ominous signs.

Ultimately the shift of millennials to the Left could lead to a conflict between the oligarchs and the clerisy over the appropriation of wealth. The way things look now, the battle will be over who pays for an ever-expanding welfare state—not how to expand the middle class. This is likely to shift our politics increasingly in an authoritarian direction. As the great historian Barrington Moore noted, “No bourgeois, no democracy.” In a country where the middle ranks are shrinking, the elites more powerful, and ideological polarization is on the rise, the prospects for democracy, even in its greatest homeland, could be grim indeed.

In the world envisioned by the oligarchs and the clerisy, the poor and much of the middle class are destined to become more dependent on the state. This dependency could be accelerated as their labor is devalued both by policy hostile to the industrial economy, and by the greater implementation of automation and artificial intelligence.

Opposing these forces will be very difficult, particularly given the orientation of our media, academia, and the nonprofit world, as well as the massive wealth accumulated by the oligarchs. A system that grants favors and entertainment to its citizens but denies them property expects little in return. This kind of state, Tocqueville suggested, can be used to keep its members in “perpetual childhood”; it “would degrade men rather than tormenting them.”

"Perpetual childhood," indeed. There is more to come on that theme, as well as the degradation and the torment, to come.