BOHANON: Flying the Progressive Skies

August 6, 2012

For immediate release (538 words)

by Cecil Bohanon, Ph.D.

A Manhattan scion gets on United Airline flight 797 to Los Angeles on August 31 and takes her seat in the first class section. Her daddy, who has taxable income of $1 million, forks out $6,288 so his princess can fly in style to Southern California to work on her tan. A teenage girl from New Jersey flying to California to attend a church youth conference also gets on the plane and takes her seat in coach. Her dad, who has taxable income of $50,000, pays $379.

Is United Airline perpetrating a social injustice against the working-class girl? The question is bizarre. The rich guy is paying $5,909 more so his daughter can have a slightly larger seat and better food for the 12 hours both young ladies will be flying to and from the coasts. Put another way, the rich dad is paying about 17 times what the working class dad is paying for essentially the same flight.

Sheesh. Some people have more money than sense. If anything, it is the rich fool who is being taken to the cleaners.

Government services are in many respects similar to an airplane flight: We are all in it together. The army protects us all, we all drive on the same roads, federal emergency relief and other social-insurance programs are available to all. The current federal income tax structure charges different “passengers” different fees (aka taxes) for those shared services. The analogy only breaks apart as the Internal Revenue Service requires the rich to pay the first-class fare whereas United Airlines does not.

Nevertheless, under the current federal income tax code the rich dad in our story will pay $319,170 on his work earnings while the working-class dad will pay $6,630. So the rich guy pays 48 times what the working-class guy pays for the same federal services — about three times the differential he pays for his offspring’s first-class ticket. Even If the rich dad got all his income from more favorably treated dividend income he would pay $139,650 or 21 times what his working-class counterpart chips in. It is still more than the ratio in our airfare example.

Many of my leftist friends think that the current federal tax code is terribly unfair and insist that “social justice” requires that taxes be raised on the rich — and only the rich, at least for now. If the current tax code reverted to what they propose (a pre-2001 rate structure for only the top income earners) our million-dollar dad would pay $352,432 in taxes in 2013 while the Jersey dad would continue to pay $6,630. This is a 53:1 ratio.

It is good to know that we can replace an “unfair” and “oppressive” tax system with one that epitomizes “justice” and “rightness” by going from a 48:1 to 53:1 ratio of tax liability between the two earners. Ah, the scientific nature of the left’s social ethics.

I am being a sarcastic smarty pants. The federal income tax code has always been progressive. For as long as I can remember, leftist have calling for it to be more so, leaving us an alternative explanation to the “social justice” narrative — big-government advocates just want the money, and envy is a potent political tool to get it.

Cecil Bohanon, Ph.D., an adjunct scholar with the Indiana Policy Review Foundation, is a professor of economics at Ball State University. Contact him at director@inpolicy.org.

 

Resources

1. Estimates of airline ticket prices are from the author’s search on Expedia, Aug. 2, 2012.

2. All  tax calculations are from Wall Street Journal tables and the following IRS publications:

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

http://www.irs.gov/pub/irs-pdf/f1040.pdf?portlet=103



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