As Maggie Thatcher Once Said...

The trouble with socialism is that eventually you run out of other peoples money.

US running out of millionaires to tax...

Newsalert has posted a chart from a Wall Street Journal blog titled “Recession and the Rich.” The chart, based on 2009 IRS figures, shows that the number of taxpayers reporting annual income over $1 million fell 39 percent between 2007 and 2009; the number of super-wealthy individuals making over $10 million annually plunged 55 percent.

The carnage wasn’t confined to millionaires. The number of taxpayers earning over $200,000 per year also decreased by 612,000 – or 13 percent.

If you are tempted to join Sen. Frank Lautenberg, D-N.J., in a bit of schadenfreude over the fact that nearly four in ten millionaires disappeared in two years, don't be. The chart also shows how the loss of these top income earners adversely affected the federal government’s bottom line.

In 2007, those making above $200,000 (but less than $1 million) paid $610 billion in federal income taxes. In 2009, it was only $434 billion – leading to a 29 percent decrease in government revenue.

Same for the 408,394 millionaires who paid $420 billion in taxes in 2007. Just two years later, their numbers had been dramatically reduced, and the revenue the U.S. government collected from them likewise decreased to $232 billion.

Since the top 5 percent of taxpayers paid 58.7 percent of all federal income taxes in 2008, the vanishing of millionaires is bad news for everybody.

Of course, this makes sense.  The "ordinary" middle class tax payer receives the majority of his/her income as salary, and while some small fraction of them of them may lose their jobs during a recession when unemployment rises from ~4% to 9%, and the rest may loose some investment income, rich people rely much more heavily on investment income which is hurt much more by the recession than salaries, hence a lot of loss in the the upper income brackets.

You can't tax the rich into a balanced budget unless there are lots of rich, and the movements just haven't been in that direction.  The way to get America's budget working again is not to tax the rich, but to put them back to work.

And I can't resist posting Frank Lautenberg advocating "Eliminating the Rich"...