Interviewers at campusreform.org often go on campuses to interview college students about their knowledge of various current issues. There has been a lot of talk lately about whether “the rich” in the United States pay “their fair share” in taxes. Of course, “fair” is almost never defined. That’s part of what makes this 5-minute video, titled “WATCH: Students stunned when they hear how much ‘the rich’ already pay in taxes” so interesting. When many of the students hear how much “the rich,” which in this video is taken to mean high-income people rather than wealthy people, pay, some actually advocate cutting taxes for “the rich.”
Notice that up to about the 2 minute point, most of the students they show don’t have a clue about the threshold for the top 1% of income earners. Most of the interviewees dramatically overstate it, in a few cases by one to three orders of magnitude. Then at about the 2:10 point, the interviewer informs them.
Watch from about 2:48 on, when the students give their estimates of the percent of income the rich pay in taxes now. Watch how they switch, based on this information, at about 3:17. Watch the guy who wanted to tax them more who switches to wanting to cut their taxes (at about 3:26.) Watch the woman who wants to force people making $750k a year to pay only 5 to 10 percent of their income in taxes (at about 3:48.)
The interviewer, Addison Smith, has a nice soft touch. Watch the whole thing.
READER COMMENTS
Matthias
Nov 13 2021 at 1:18am
Very interesting video.
The comments on YouTube are predictably awful.
BC
Nov 13 2021 at 7:04am
I remember a poll about 10 yrs ago that showed people (general public, not just college students) thought that the top marginal tax rate should be raised. When asked what they thought the top rate should be, the modal answer was 25%. At the time, the top marginal rate was already 35%.
Floccina
Nov 16 2021 at 11:44am
I remember reading something along that line also but there is also thing:
I’m guessing that it depends on how the question is asked.
Thomas Lee Hutcheson
Nov 13 2021 at 8:52am
So who DO they think should be taxed to reduce the structural deficit? 🙂
Juan Manuel Perez Porrua Perez
Nov 13 2021 at 11:11am
Just a small caveat venditor:
Monte
Nov 13 2021 at 2:00pm
So…how does this in any way diminish the more salient point that the top 1% pays more in federal income taxes than the bottom 90% of income earners in America. Accounting for more than 20% of the national income, they pay approximately 40% of all taxes?
Thomas Lee Hutcheson
Nov 13 2021 at 5:27pm
It does not diminish or augment the point (even if it included all taxes). It’s just sort of irrelevant.
The issue is we would be better off in the long run if we diminish the structural deficit and free up more resources for investment, so we need to either reduce structural expenditures or increase structural revenues. If the latter, in as low deadweight loss way as possible. I think collecting more from people with high incomes, especially if we got rid of business taxes, imputed business income to owners, turned deductions into partial tax credits, and taxed capital income (including capital gains, indexed but w/o step-up on inheritance) as ordinary income, is a fairly low deadweight loss way to do that. Shifting from capped wage taxation to a VAT to fully (or more than fully) fund SS, Medicare/Medicaid /ACA/unemployment insurance/paid family leave would also be good ideas. Much more generous retirement savings allowances would make the income tax a bit more of a consumption tax, which would also be a good idea.
None of these things depend on what percentage of taxes are paid by what percentage of the people.
Monte
Nov 14 2021 at 5:07pm
Irrelevant, perhaps, in dealing with structural deficits, but (for purposes of this exercise), it’s completely relevant. The whole point is to demonstrate to the uninformed just how much of the tax burden is being borne by “the rich.” We can’t formulate good tax policy based on the false premise that “the rich aren’t paying their fair share.”
I won’t argue the merits of how you propose to manage the structural deficit, but I will say that I’m opposed to the ACA and paid family leave, as I understand them.
David Henderson
Nov 13 2021 at 2:27pm
Thanks, Juan.
Yes, their political bias is obvious. That’s what makes the tone so refreshing. They’re not nasty when they question the students; they just gently push them to be aware of some facts and it works.
nobody.really
Nov 16 2021 at 8:21am
And that’s the nature of political bias: They make people aware of some facts while excluding others, for the purpose of leading to a desired conclusion.
Yes, the top 1% pay something like 40% of taxes. What does that tell us? Among other things, it tells us that the rich are MIND-BLOWINGLY RICHER than ever before in history, and that economic inequality in the US has never been greater. Income disparities are unprecedented–and those disparities are dwarfed by the wealth disparities. This represents an inversion of the American story when, at its founding, the US was among the most egalitarian nations in the world. (Admittedly, enslaved people, women, and Native Americans barely registered in these statistics.) None of this is mentioned.
Nor do they mention that average real disposable income for the top 1%–that is, AFTER-TAX income–has never been greater, so it’s not as if these people are suffering as a result of their status.
Nor do they mention the size and growth of the US deficit. Nor the recent disclosures about how much tax avoidance/tax evasion the rich engage in. Nor the fact that the wealthy have succeeded in getting many jurisdictions to collect and report LESS tax data than they did in the 1970s–suggesting that the levels of income and wealth inequality are even more extreme than we can currently measure. (See Thomas Piketty’s Capitalism and Ideology (2019).)
Of course, we’d need to explain how detrimental high taxes are to productivity. Yet they also neglect to say that US productivity growth has been DECLINING SINCE WWII–as tax rates have been falling.
(I recall a study in which Americans were shown graphs depicting various levels of income inequality, and people were asked to say 1) which graph they thought reflected the current state of income distribution in the US, and 2) which graph they regarded as desirable. Of course, people were quite ignorant of the facts. People preferred a world that was more egalitarian than they imagined it was, and people wildly underestimated how inegalitarian incomes already were. Alas, I can’t find the study.)
In The Upswing (2020), Robert Putnam tracks economic, educational, social, and political variables from the late 1800s to today, and finds that inequality (coupled with declining social mobility) correlates with cynicism and loss of social cohesion. And in Work (2020), James Suzman notes that the least-regulated people in the world, hunter-gatherers, work only 13 hours/week; they perceive themselves living in a world of plenty. But they are able to maintain their existence only through strong norms that limit people’s ability to acquire not only more material possessions than their neighbors, but more status as well.
Curiously, none of this made it into the video. Can’t imagine why.
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