If you are a regular reader of Nealz Nuze, or you listen to the show, you already know that we have the most progressive tax system in the industrialized world.  Proggies seem to conveniently ignore this point, emphasizing the need for even greater progressivity in our tax code: Make is easier for moocher to receive welfare disguised as “refundable tax credits” and increase the tax burden on the evil rich.

So how “progressive” is our tax code? 

That question leads me to a blog post by a professor and chairman of the economics department at Harvard University, Greg Mankiw.  He took the latest CBO report and ran some numbers for 2009, the most recent year for which we have records.  Bear with me … he wanted to look at not only the amount of taxes someone paid, but also how much money individuals got BACK from the government in the form of refundable tax credits, welfare payments, entitlements and other government goodies.

Again .. to do this we divide income earners into five levels – quintiles.  You have the poor, low income, middle income, high income, and the wealthy.   So here are his calculations for the taxes each income level pays.  What this economist measured here is the amount of taxes the members of these income groups paid TO the government minus the amount of money these people got back in the form of various government payments.

Bottom quintile – the poor:   -301 percent

Second quintile – low income:   -42 percent

Middle quintile: -- middle income   -5 percent

Fourth quintile:  -- upper income  -10 percent

Highest quintile: --  high income  +22 percent

Top one percent: -- the evil rich  +28 percent

As Greg Mankiw explains, the bottom quintile of Americans are essentially receiving $3 in unearned income from the taxpayers for every dollar they earn.  He also points out something rather critical, and this is the fact that the middle quintile of taxpayers is in the negative, which means that they are net tax consumers.  That is almost a 20 point swing since 1979, when middle income earners were tax contributors.

This explains how 50% of Americans pay no income taxes at all … and instead absorb tax money paid by others.

Now … in light of all of this, why are Democrats in general, and Obama in particular, so completely obsessed with the idea of raising taxes on the rich.  Politics .. it’s all politics.  They know full well, as history has repeatedly shown, that raising taxes on the most successful and highest achieving Americans will not result in increased tax revenues.  In fact, the increases might even result in lowered tax revenues.  None of this matters though.  The purpose here is to energize the Democrat voter base.  Tell these people that all of those evil rich people who have been earning all that money .. those people who drive nicer cars and take luxurious vacations .. well it’s just not fair that they have so much money that they don’t need, and we’re going to do something about it.  We’ll take it from them so we can spend it on you.  Guaranteed vote-getter.