Letter: America’s wealthiest pay lion’s share now

Tuesday, May 1, 2007 | 7:15 a.m.

We can expect class-warfare rhetoric from New York Times' columnist Paul Krugman, and his April 29 column in the Sun, "By comparison, early 20th century wage gap a drop in the bucket," doesn't disappoint.

But Krugman is an economist by training, so we might also expect him to show some familiarity with the basic math of income and taxation in the United States. And here he fails us.

Krugman voices his usual desire to "raise taxes on the rich and use the money to strengthen the safety net" - Social Security, Medicare and Medicaid. (He writes this in the context of a column about income taxation, which is wrong. Those entitlements are nominally funded by payroll taxes, not income taxes. But never mind.)

The truth is, we could confiscate the incomes of the billionaires Krugman clucks at - simply tax away every dime they earn - and it wouldn't come close to fixing the looming revenue shortfalls in those entitlement programs. Or erase the federal budget deficit.

We could, if we chose, set up a system such that the top 5 percent of all earners - "the rich," as any Democrat will tell you - paid over half of all income taxes, and we'd still have a deficit to worry about.

How do I know this? Because it's the situation we're in now. That top 5 percent covered 57.1 percent of all income taxes paid in 2004 (the most recent year studied by the Treasury Department).

The bottom 40 percent of earners? Their net income tax burden was zero. That's right, they paid nothing. Still think our income tax system isn't sufficiently progressive?

The growing wage gap is real, and it may strike some as subjectively unfair. But let's not kid ourselves - higher-income earners are already paying a lot of taxes.

In fact, it may be that lower-income earners aren't paying enough. Is it a good thing that half of all taxpayers have essentially no investment in the nonentitlement portion of the federal budget?

Jeff Nation, Las Vegas