A group of American conservatives have set up an initiative called 'We are the 53%', echoing the Occupy movement's 'We are the 99%' slogan. The name is an allusion to the fact that the entire US federal income tax revenue is borne by 53% of American households. The remaining 47% are exempt from paying income tax, mostly because their incomes are too low. The 53ers’ self-perception goes: while the others are whining and malingering, we are the ones who roll up our sleeves and get the work done.
In Republican circles, there seems to be a political demand for such messages. Some candidates are contemplating ways to make the tax code more regressive. Herman Cain, for example, has presented a proposal to lower the federal income tax, and make up for the revenue shortfall by introducing a 10% federal sales tax.
Strangely enough, these proposals are being presented as 'pro-enterprise'. Since when is the imposition of higher taxes on the poor part of free market economic thinking? Accepting the current tax burden as given and discussing how it should be distributed is not a fruitful undertaking for those who support the free economy. A more promising approach is to identify areas where government spending is especially ineffective or harmful, and can be done away with even in the short term. The next step is to show how the savings can be used to finance tax cuts right across the distribution. For the British context, the IEA's 'Sharper Axes, Lower Taxes' does exactly that. Are there no wasteful government activities in America, or why do American conservatives not come up with something along those lines?
Even though both sides would surely vehemently deny it, the 99ers and the 53ers share commonalities. Both are lifestyle movements rather than strictly ideological movements, and both are mostly about self-laudation and righteousness. The website of the 53ers is little more than a platform for people who like to talk about how hard-working and virtuous they are.
Still, unhelpful as the 53ers’ initiative may be, I could not help feeling a hint of schadenfreude when learning about them. The 99ers wanted a debate about ‘fairness’. Now they’ve got one, at least in the US.
But adding figures to the debate is about the last thing the Occupy movement needs. According to HMRC data, the top 1% of income-tax payers contributed 26.6% to last year’s income tax revenue. Apparently, not everything is squirreled away to the Cayman Islands. Is 26.6% too little? Maybe so. Maybe the ‘ideal’ share is a couple of percentage points higher. But framing the issue in those terms – how to raise the tax contribution of the top percentile from 26.6% to 30% or 35% – is not quite the gripping story that would mobilise people to camp outside St Paul’s, is it?
On the contrary: to a large extent, the success of the Occupy movement depends on journalists just parroting their claims that the elites should ‘contribute their fair share’. Questions about much the top percentiles already do contribute, how much more it should be, and why, is clearly not conducive to their case. If I were an Occupier, I would take advantage of the proximity to St. Paul’s and pray that journalists never start asking such questions.
Kristian Niemietz is the Poverty Research Fellow at the IEA