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Entry: Greenspan's Gambits Link: http://www.takimag.com/site/article/greenspans_gambits#5346 Post contents: MSS is full of economic myth and misconception that one doesn't know where to begin correcting him. Here are few of his worst misconceptions and mistatements of fact. MSS asks: "When I read something like this, I always wonder what the person who wrote it means by the rich." To clarify, the "rich" are the top 20% who earn 90% of the national income. MSS asked: "Does he mean the top 50% of people filing personal income tax returns (who pay 96% of all personal income taxes) - or the top 1% (who pay 36% of them)? Or who?" Your yapping about INCOME taxes is irrelevant, because income taxes do not contribute but to a fraction of federal revenue. It is payroll taxes that provide the vast majority of federal revenue. Approximately 67% I believe. Anyone making less then $100,000 pays more in payroll taxes then he pays in income taxes. Yet most income over $90,000 is not subject to payroll taxes. Consequently, the effect of the income and capital gains tax cuts---combined with substantail increases in the payroll taxes during the Clinton/Gingrich era, has been to shift the burden of the federal government from the "rich" to the middle class. MSS asked: "The top Federal income tax bracket is now 35%. It has been as high as 90%. How much of any person’s income ought the government to be able to take?" I might mention that real growth during the time when the income taxes were 90% was much higher then when they were 35%. Over 4% compared to less then 3% in the 1990's, and now after the Bush tax cuts, barely 2%. The principle that built the modern United States, the funded Rural Electrofication,the Space Program, the US military, and the technological developments that made the US economy the most advanced and productive in the world would not have been possible without a progressive income tax. Not to mention our transporation, health and safety infrastructure. I might also point out, that besides creating the modern middle class from the working class, this system benefited the rich, because it created WEALTH that the "free market" could have never created. It made millions of workers into business owners, entreprenuers and small property holders. Everyone benefits from the progressive income tax in the long run, where as only the rich benefit from NO or flat income taxes. MSS sed: "The only recent period during which there has been surplus was for a few years during the Clinton administration. The main reason for this was not Clinton’s tax hikes, but that by a happenstance of history, the Cold War ended..." Actually the Clinton/Gingrich era "surplus" was a fiction, it never existed. Most of the "surplus" was an illusion, of the internet bubble, the projected capital gains taxes from the "dot.CON" speculation, if the bubble was sustainable, which it was NOT! I believe there was only year that there was actually a surplus was due mostly to the payroll tax surplus, which Greenspan/Clinton/Gingrich passed. A lot of this goes back to the Reagan era when the nonsense a about "Supply side Economics"---the original voodoo economics--- proved a failure. To minimize the huge budget deficits that resulted from the Reagan tax cuts, Greenspan invented the charade of the Social Security trust fund, in which the Social Security Payroll taxes were raised along with excise taxes to make up for the failure of "voodoo economics", the ideology of tax-cuts-create-growth, which don't work. Sent at: 2008 11 22