“Perhaps the most fertile source of misunderstandings about incomes has been the widespread practice of confusing statistical categories with flesh-and-blood human beings. Many statements have been made in the media and in academia, claiming that the rich are gaining not only larger incomes but a growing share of all incomes, widening the income gap between people at the top and those at the bottom. Almost invariably these statements are based on confusing what has been happening over time in statistical categories with what has been happening over time with actual flash-and-blood people.”

” Although such discussions have been phrased in terms of people, the actual empirical evidence cited has been about what has been happening over time to statistical categories- and that turns out to be the direct opposite of what has happened over time to flesh-and-blood human beings, most of whom move from one category to another over time. In terms of statistical categories, it is indeed true that both the amount of income and the proportion of income received by those in the top 20 percent bracket have risen over the years, widening the gap between the top and bottom quintiles. But U.S. Treasury Department data, following specific individuals over time from their tax returns to the Internal Revenue Service, show that in terms of people, the incomes of those particular taxpayers who were in the bottom 20 percent in income in 1996 rose 91 percent by 2005, while the incomes of those particular taxpayers who were in the top 20 percent in 1996 rose by only 10 percent in 2005- and those in the top 5 percent and top one percent actually declined.”

From Intellectuals and Society by Thomas Sowell

Randall Hoven writes in American Thinker, Class Warriors Got What They Wished For that the Class Warriors have created a great contradiction;  they wish both for a more progressive tax system and for less income disparity or fewer wealthy. Yet a highly progressive income tax system places a bigger burden on generating tax revenues on the very social segment they wish to minimize.  The result of this policy and this recession is that the tax revenue from the wealthy has significantly dropped.

In my article also published in American Thinker, The Immorality of Class Warfare, I point out the moral hypocrisy of those  who condemn the very segment we have deliberately structured our system to depend on. Hoven shows that this system is equally pragmatically flawed; not only is it morally repugnant but it is ineffective at supporting the huge growth in government services  that the class warriors demand.

An excerpt from Hoven’s article:

Revenues did not fall because of a tax rate cut; there was no tax rate cut between 2007 and 2009.  Revenues did not fall because of some give-away to the rich.  In fact, the problem was just the opposite.  Revenues fell because there were fewer rich and the rich made less money — just as class warriors wanted.

We had a progressive tax structure that relied on the rich getting richer.  Then we got what we wished for: for the rich to become like us.  So now we’re all broke.  We had a bubble-based tax system, and the bubble burst.

Why do you think revenues fell by over 20% to the federal government and states like California during the Great Recession, when GDP fell only 4%?  Because the federal government and states like California have extremely progressive tax structures.  You get rid of the rich, and you get rid of government revenues (and job creation).

The percentage of taxes paid by the top 1% now exceeds the percentage paid by the bottom 95%. This increase in progressiveness happened under  George Bush. The top 1% are made of 1.4 million taxpayers and pay 40.4% of all taxes, and the bottom 95% consist of 134 million taxpayers and pay 39.4% of all taxes down from 58% twenty years ago.

Reference here.

It is important to note that any tax policy that hurts the ability of those those top 1% to produce income will have a dramatic effect on tax revenues.