Envious positions: what do class-warriors really think? Take the class-warfare quiz and find out

National Review, Sept 1, 1997 by Stephen Moore

CLASS warfare reared its ugly head again in Washington this summer. House Minority Leader Richard Gephardt, long the chairman of the greed-and-envy caucus in Congress, continues to refer to the most affluent and successful Americans as having "won the lottery of life." Gephardt unmercifully savaged the GOP tax-cut plan as a "windfall for the well-off." The White House enthusiastically joined the class-warfare assault. Before the budget compromise, President Clinton complained that the GOP tax plan was "unfair" because "two-thirds of the economic benefits go to the richest 20 per cent" of Americans.

The rich-baiting message showed signs of resonating with voters. A July USA Today poll found that a majority of Americans think the GOP tax cuts were weighted too heavily in favor of the wealthy -- even though three-quarters of the savings are directed to families with incomes below $75,000.

The media have been dutifully spreading the class-envy message. A series of front-page stories in the New York Times earlier this year shouted that many of the richest Americans are getting away with paying close to no taxes. The Philadelphia Inquirer alleges that the rich are hoarding America's wealth at "a faster pace than at any time since the Robber Baron era." Here's how the Washington Post summarizes our current plight: "Powerful economic forces are dividing America into separate nations: one inhabited by prosperous economic winners and the other by struggling and increasingly embittered losers."

It all sounds very bleak. But it is also all very exaggerated. Take the class-warfare IQ test below, and you may be pleasantly surprised with the true state of the financial affairs of American families.

1. False. In 1993, the wealthiest 5 per cent of Americans collected 19 per cent of the nation's total income. In 1930, the top 5 per cent collected 30 per cent. In fact, in every year from 1913 (the earliest year for which data are available) through 1941, the richest 5 per cent had a larger share of total income than they do today.

2. d) 150 countries. The U.S. poverty level for a one-person household in 1994 was $7,750. This was a higher level than the per capita income in all Third World nations and even in many non-poor countries, including Greece, Saudi Arabia, Brazil, South Africa, and Venezuela.

3. c) 15 per cent of the total. The richest 1 per cent of households earn roughly one-seventh of the total income.

4. e) More than 25 per cent. It's a popular myth that the rich don't pay their "fair" share of taxes. They earn 15 per cent of the income and pay 30 per cent of the income taxes.

5. d) 92 per cent of welfare households in the U.S. own color televisions; 98 per cent own a refrigerator; 68 per cent own a telephone.

6. d) 5 per cent. The bottom half of income earners bear just 5.2 per cent of the federal income-tax burden, according to the latest IRS statistics. In 1980 the poorest half of Americans paid 7.5 per cent of the taxes.

7. d) More than 50 per cent. About 56 per cent of the tax returns with capital gains in 1993 were for Americans with incomes of less than $50,000.

8. e) United States. The capital-gains tax rate is 28 per cent in the U.S., versus 20 per cent in Canada, 16 per cent in France, 0 in Germany, and 20 per cent in Japan.

9. c) Lay-off victims may get headlines, but they are still relatively rare. Only 3 of 100 workers were laid off from their jobs in 1995, according to the U.S. Bureau of Labor Statistics.

10. c) 60 per cent. It is a myth that federal farm subsidies provide a safety net to family farms. The bulk of the subsi- dies are provided to large agribusinesses.

11. d) Grew by more than 5 per cent. It is a popular myth that in the 1980s the poor got poorer. The lowest fifth in income saw their real incomes rise by 6 per cent from 1981 to 1989. In the 1970s and 1990s, when income-tax rates were rising, the poor suffered a real loss in income.

12. d) $250,00 more. Social Security and Medicare should not be called "entitlements," because seniors currently receive far more in benefits than what they are "entitled" to.

13. d) Six weeks. Soaking the rich won't balance the budget. Millionaires earn less than 4 per cent of all taxable earnings in the United States. In 1992 there were just 55,000 millionaires in the U.S. -- 0.05 per cent of all tax filers.

14. c) Two months. In 1995 the total profits of the Fortune 500 companies were $244 billion, which would provide enough revenue to operate the government for 58 days.

15. c) 20 per cent. Only 82 of the Forbes 400 wealthiest Americans inherited their money. Most rich Americans have not "won the lottery of life"; they earned the money they have.

16. d) Less than 10 per cent. The first income tax in 1913 had a top rate of 7 per cent. A proposed safeguard to the Sixteenth Amendment to prohibit income-tax rates from rising above 10 per cent was defeated on the grounds that no one would ever propose a tax rate that high.

17. e) Grew by 100 per cent. In 1980 federal tax revenues were $517 billion. By 1990, after two income-tax-rate reductions, federal revenues (in current dollars) had climbed to $1,031 billion.