Update on Who Pays Taxes
The top 1% of taxpayers pays 38% of all income taxes. But is that the end of the story? Here’s an exchange:
David Cay Johnson: People forget that the income tax is less than half of federal taxes.
David Henderson: In their book, Public Finance, 9th edition, Harvey S. Rosen and Ted Gayer, give a table showing that in 2005 [and things haven’t changed much since then] the top one percent paid 27.6 percent of all federal taxes. Oh, and the same table in Rosen and Gayer shows that the average tax rate (all federal taxes) on the bottom quintile is 4.3% and on the top 1% is 31.2%.
See rest of the story at Econlog.
The notion that the rich pay no taxes is outdated. Nowadays, the top 10% of taxpayers are responsible for the bulk of taxes. Tax policy should encourage investment rather than tax it.
It’s amazing to me how much Obama and many Democrats talk about wanting to pile even more taxes on high income earners. How much burden should they have to carry before Atlas decides to shrug?
Doesn’t look to me like the rich are under-taxed.
How much is enough? One percent carrying one-third of the burden is too much.
What’s wrong with a proportional tax, argued for by Milton Friedman years ago?
I predict that if a deal was struck to lessen the income disparity between the wealthy and the poor that the poor would agree to carrying a larger share of the income tax burden.
Plac ebo:
While your idea is a fantasy, it is a direct answer to Greg.
The one percent carrying one-third of the taxes tells you only that the rich are overtaxed?
Come on!
Don Levit
I’m just glad tax season is over for the year. There is nothing worse than digging through a stack of receipts!
Don Levit et al:
I take it that you feel it is unfair that the rich pay such a disproportionate share of the income tax. If fairness is your concern then you should be troubled that we have a system that concentrates so much income, wealth and power at the top- and threatens to become even more concentrated. This imbalance is more of a threat to our way of life than is the exaggerated threat of “socialism” that the fear mongers among us push.
As the journalist whose work started this page (and the criticism of which Mr, Henderson has graciously noted was overdone), I marvel that some people here and at many other sites continue to repeat the bug lie that the top 1% and the top 10% carry much to most of the tax burden.
False. Patently false.
The top 1% pay 38% of the federal individual income tax, which is a minority of federal taxes and only a fifth of all taxes.
Furthermore we have people who have huge incomes and pay no current taxes under a 1994 law Clinton signed and other laws I have written about in detail in the nonprofit journal Tax Notes, at tax.com, in my bestselling books and elsewhere.
Yes we want to encourage investment and as a small businessman I understand that. But for the last 30 years the gains have flowed almost exclusively to the top and the effective tax rate of the top 400 has fallen from almost 30% in Clinton’s first year to 22% at the end of his two terms to under 17% in 2007 (latest data). Note that rates fell much more under Clinton than Bush.
Yet the median wage has been stuck at a tad above $500 a week for a decade, incomes were $2.7 trillion less in 2008 dollars for the eight Bush years than if we had stayed at HIS CHOSEN base year of 2000 and since 2001 income taxes per capita have fallen 32 percent (that’s a tax cut recession year to 2010 a tax cut recession year).
Population has grown at five times jobs since 2000.
And a median wage worker carries a much higher federal tax burden than someone making almost $1 million per day.
Stop listening to talking points from the marketers who feed talking points to members of Congress and most of the people you see on TV and start reading the works of people who actually work with the data and you will see a very different picture.
David:
Thanks for posting your comments.
Do you have any other statistics, other than what I posted, on the wealth concentration?
Plac Ebo:
I didn’t mean to say that the income concentration was fair.
What I meant to say was that the rich pay so much a chunk of the taxes, because they own too much of a chunk of the wealth.
And, I believe you are correct that the concentration of wealth is even more dangerous than socialism or communism.
With such concentration of wealth, we probably aren’t too far from similar conentrations in socialistic or communistic countries.
In communism, man uses man
In capitalism, it’s just the reverse.
Don Levit