Federal tax code unfair to the super rich

This past week the Joint Committee on Taxation (JCT) chaired by Republican Paul Ryan released a document titled 'Fairness in Tax Policy". Not surprisingly conservative pundits like Forbes contributor Robert W. Wood fall all over themselves to misrepresent the information in this document with statements like "The 1% Makes 19% Of All Income, Pays 49% Of All Taxes". The reality is this number is just a projection for 2015 tax returns not the actual data. As Fox News reports the most recent release by the IRS show the top 1% making 19% of the adjusted gross income while paying 35% of the taxes.

Of course this statistic only tells half of the story. Reports show that the top 1% also hold 40% of the wealth. Paying only 35% to control 40% seems like a situation most Americans would gladly accept. This simplistic statistic also misses the fact that federal income tax is only one of many taxes that American's pay. After taking into account all of the other taxes involved the reality is the top 1% actually pay less in taxes as a percentage of income than the next 20%.

Having said that, the supposed purpose of the JCT report is to discuss fairness in tax policy. If this is the case then why would they only touch a few minor tax inequality statistics?

For example is it fair for the top 1% to earn just 19% of the income yet receive 50.6% of the tax breaks?

Is it fair that nearly 20,000 household with income over $500,000 paid zero federal income tax?

Is it fair that someone in the 10% tax bracket that donates $1,000 only gets a credit of $100 while the same donation from someone in the 35% tax bracket gets a credit of $350?

Is it fair that the wealthiest 0.01% earn half of all the capital gains yet pay as little as a 15% tax rate on that income?

Is it fair that the top 20% of households receive 80% of the tax benefit of retirement savings while the bottom 60% only receives 7%?

Is it fair that each year the wealthy enjoy approximately $40 billion in tax breaks thanks to a step up basis rule that allows heirs to receive assets completely free of taxes?

Is it fair that politicians use misleading partial information to push for further tax cuts even though studies show those cuts tend to hurt economic growth?

Is it fair that interest and dividends earned must be reported as income yet capital gains are only realized upon the sale of the asset?

Is it fair that if you lose money in the stock market the government will subsidize your loss but if you lose money in your 401K they won't?

Is it fair that the mortgage interest deduction benefits only a third of American households?

Is it fair that as tax rates have come down over the last half century the top 1% has seen their share of income double?

Is it fair that some people get to consider the bulk of the income they earn for their job as capital gains and pay nearly half the rate those with a similar income?

If the goal of Paul Ryan and the JCT was to find one simple bit sized statistic that would convince low information voters that the super rich are somehow being repressed then using "the top 1% makes 19% of the income but pays 35% of the federal taxes" is the ideal talking point. It's easy to consume and allows Republicans to ignore the litany of benefits the tax code affords certain groups of wealthy Americans.

If, however, the goal was to report on the fairness in tax policy this report is an unmitigated failure.

If fairness is the ultimate objective then the fact that some of the top 1% pay the top tax rate while others pay zero in federal income taxes should obviously be a topic of discussion. If broadening the base is important then fixing the ever increasing income equality problem in the U.S. that causes the widening tax gap should be a top priority. If applying the tax code uniformly to all citizens is a concern then using official reports to mislead the public and advance a partisan agenda is shamefully unpatriotic.

It's certainly possible that the top tax rate in America is too high but the fact that elected officials in charge of tax policy pretend that what the top 1% pays in federal income tax is reasonable proxy for fairness tells you all you need to know about how serious they are about fixing the problem.