Wednesday, August 3, 2011

Matt Damon Needs a Wider Circle of Friends (and an Education on the U.S. Tax System)

I loved Matt Damon in "The Adjustment Bureau" where he played a likable, ambitious politician living in a world controlled by a higher-power that makes adjustments to reality. The movie's ending was a bit weak, but Mr. Damon delivered a solid performance. He's a very talented actor.

Unfortunately, Mr. Damon apparently sometimes confuses reality with acting when he plays politician, as shown in the following clip on taxation. Maybe Matt Damon now believes that he is part of The Adjustment Bureau. There are numerous factual mistakes with some of Mr. Damon's remarks and, I can speak from personal experience, that he is wrong about what some people actually did with their Bush Tax Cuts.

DAMON: [0:06] "The wealthy are paying less than they paid, you know, at any time else, I mean, certainly in my lifetime, and probably ... probably, you know, in the last century."

Okay, let's check a few facts.
  • FACT: The share of total income tax paid by upper-income taxpayers has actually INCREASED over time. (chart, data)

  • FACT: There is a difference between the marginal tax rate and the actual taxes paid by a taxpayer, called the effective tax rate. The effective federal tax rate for ALL taxpayers has dropped since at least the 1980s. The absolute drop was larger for upper-income taxpayers because they also pay among the highest effective rates. Taxes from upper-income taxpayers are also swayed by recession.

  • FACT: According to Wikipedia, Matt Damon was born in 1970.

  • FACT: The so-called Bush Tax Cuts reduced the top marginal tax rate on the wealthy from 39.6% to its current rate of 35%. Similarly, the bottom tax rate was reduced from 15% to 10% (though many often forget to mention this point). The top margin rate was reduced by 11.6% while the bottom marginal rate was reduced by 33%.

  • FACT: During Mr. Damon's lifetime, the lowest top marginal tax rate was actually 28%, passed by Congress in 1986. Although many refer to this as one of the Reagan Tax Cuts, this Legislation was co-sponsored by Democratic Congressman Dick Gephardt (MO) and by Democratic Senator Bill Bradley (NJ).

  • FACT: 28% is lower than 35%.

  • FACT: The "last century" includes the period from 1912 until today.

  • FACT: The modern income-progressive tax system started in the United States in 1913 after the passage of the Sixteen Amendment (see one author's take on the damage wrought by the Sixteenth Amendment).

  • FACT: Thanks to the Revenue Act of 1913, the top marginal tax rate was 7% until 1917 when dramatically Congress raised taxes to pay for the United States' entry into World War I, under the Wilson Administration.

  • FACT: During the last century, the lowest top marginal tax rate was 7%.

  • FACT: 7% is lower than 35%.

  • FACT: Technically, before 1913, there was no federal income tax (in modern times, hence the requirement for the Sixteenth Amendment so that income taxes would be considered Constitutional). Because 1912 falls within the "last century," one could argue that the lowest top marginal tax rate was actually 0%. But, I'd be quite happy with 7%.

  • For a more detailed look at recent tax history, see "Pretty Pictures and a Political Rorschach Test."
DAMON: [0:16] "Tax the really rich--you know, guys like me."

Mr. Damon, if you feel that you are not paying your "fair share" of taxes, and you feel that sending more money to the government is the best and most productive use of your excess capital, then there are plenty of easy ways to pay even more taxes.
  • Avoid taking any deductions or exemptions on your federal tax return.

  • Cut a check directly to the Treasury. Please see "Useful Information for Under-taxed Individuals."

  • Don't wait for slow-moving, ineffectual Washington, D.C. to take action!
DAMON: [0:34] "Well, I didn't go start a small business with my tax break, uh, and I don't know anybody else that did. ... Nobody went and started a business with their Bush Tax Cut. I don't know who would believe something like that. It just defies common sense."

Mr. Damon, I recommend broadening your circle of friends. What did I do with the extra money that I kept thanks to the Bush Tax Cuts? I started a business! You what else? That business generates taxable income that pays for things like roads, fire and police protection, public schools, etc. In an indirect way, it created jobs by freeing up my old job at a productive, profitable, tax-generating company, while I created a new position for myself and my employee.

And you know what I do with a portion of the profits from that company? I use it to help math, science, and technology education in my local public and private schools. I take an ACTIVE role in my community. I do not depend on a far-away, slow-moving government in Washington, D.C. to do the job for me.

1 comment:

  1. Fantastical breakdown of Matt Damon's utter stupidity. I'm sharing this with my fb friends :o)