Bill O’Reilly’s Amazing Inequality Take

“Taxes are through the roof on affluent Americans and business profits, but for the rest of Americans things are not so bad.”

Fox TV personality Bill O’Reilly, the host of cable’s most-watched news hour, used these exact words last month to describe “Income Inequality in America.”

“How much more can the government take from the affluent,” O’Reilly went on to ask, “without crashing the entire free market economy?”

Actually, as the Atlanta Constitution’s Jay Bookman points out in his response to O’Reilly’s rant, the “entire free market economy” did nearly crash in 2008 – after a decade of tax cuts for America’s most affluent.

O’Reilly, in short, is simply blowing smoke. But we can’t afford, Bookman stresses, to let his claims go unanswered – since O’Reilly’s take on the world is animating “the economic policy of the entire Republican Party.

So Bookman offers a variety of additional facts to rebut the basic O’Reilly take. Corporate taxes going “through the roof”? The reality: In 1989, corporate taxes amounted to 1.9 percent of GDP. Last year, a quarter-century later, corporate taxes amounted to 1.9 percent of GDP.

How about the personal income taxes the rich pay? Not much of a going “through the roof” there either. Between 1989 and 2011, the effective tax rate on America’s top 1 percent increased by a somewhat less-than-whopping one percentage point.

But to really get at the utter fraudulence of O’Reilly’s claims, we need to extend our historical frame of reference beyond 1989. Let’s go back to 1963, the last year with federal tax rates at the levels first set during World War II. Let’s also bring our story through 2013, the year an Obama tax hike did raise the federal income tax burden on America’s wealthiest.

In 1963, all earned income over what these days, after adjusting for inflation, would equal $1,522,595 faced a federal income tax rate of 91 percent. In 2013, after the new Obama higher taxes on the rich went into effect, the basic federal income tax rate on income over $1,522,595 stood at 39.6 percent, less than half the top rate in 1963.

For the record, the take-from-affluent 1963 saw the United States right in the middle of the nation’s greatest period of middle class prosperity ever.

That middle class prosperity has long since vanished, done in by four decades of tax and other public policies that have been funneling America’s wealth ever more lopsidedly upward.

How much has this growing inequality cost average Americans? Don’t hold your breath waiting for Bill O’Reilly to answer that question. But a National Public Radio Planet Money analyst did helpfully run the numbers earlier this year.

If the United States today, this analysis notes, had the same distribution of income as the nation sported in 1979, the year before Ronald Reagan won the White House, the average incomes of America’s middle 20 percent of families would be $8,752 more than today’s actual middle class incomes and the average incomes of the nation’s most affluent 1 percent would be $824,844 less.

Sam Pizzigati edits Too Much, the Institute for Policy Studies online monthly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class (Seven Stories Press).