The 99ers and the 53ers: when two groups quarrel, a third rejoices


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

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).


2 thoughts on “The 99ers and the 53ers: when two groups quarrel, a third rejoices”

  1. Posted 07/11/2011 at 13:51 | Permalink

    A key concept in thinking about the tax burden is ‘balance’. Thus some expenditure taxes may be regressive, while some income taxes may be progressive. The evidence is that across a very wide range of incomes, the overall tax burden is roughly proportional to income. Personally I support the idea of a ‘degressive’ income tax, with a single (flat) marginal rate on all incomes exceeding the various personal allowances. The average income tax payable (as a proportion of income) would increase as one’s income increased; but this could be balanced by other taxes being regressive. Two conclusions follow, I think. One is that it’s really not very helpful to try to pick and choose bits of the tax system to reform: one has to look at the system as a whole (as, for example, the recent Mirrlees Review does). Secondly, if we are ever going to get significant and radical tax reform, which I’ve been arguing for for nearly fifty years now, to make it politically possible there is probably going to have to be a really significant reduction in government spending in order to give enough elbow room to sweeten the tax pill for nearly everyone. Otherwise the losers will grumble far more loudly than the gainers will purr.

  2. Posted 07/11/2011 at 14:23 | Permalink

    There are several different issues which are worth pursuing. One is the total tax take, which is too high and supports various activities which cause deadweight losses and other burdens as well as distorting investment and employment decisions. The second is the proportion of tax which should be borne by “the rich” (a problematic category which has no unique definition). The third is the tax structure, which in the UK is ludicrously complicated: no human being can understand it in its entirety, and significant resources are wasted just trying to ensure compliance, let alone those devoted to tax avoidance.
    While many of the occupiers are no doubt nice people, and many of their concerns understandable, the general drift of their thinking is naive and impractical.To be fair I think even Ed Miliband recognises this!

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