Evil Bush Tax Rates Made Rich Bastards Pay More Taxes!

For all the yammering about the wisdom or tragedy of extending Bush-era tax rates, precious little hot air has been expended on, like, looking at what effects the goddamn things had on who paid how much tax. Back during the 2008 election, Joe Biden used to say that it was "patriotic" to ask the rich to pay "their fair share" in taxes. What that widely repeated nostrum misses is that the rich (however defined) have been paying a greater share of income taxes in the aughts.

Below is a chart from the Tax Foundation that lists the percent of federal income tax paid by each income group. Whatever else you want to say about the Bush tax rates, they made the wealthy pony up more of the whole.

In 2000, for instance, the top 1 percent of income earners paid 37.42 percent of all income taxes collected. In 2008, they paid 38.02 percent. That's down a bit from the peak of 2007 and reflects the recession hitting. The bottom 50 percent of filers saw their share of the income tax burden fall from 3.91 percent to 2.7 percent. Two groups in the upper half of the income distribution made out, it seems: Folks coming in between between 10 percent and 25 percent of income and those between 25 percent and 50 percent. Each saw their share of total tax collected decline a bit (like the share of taxes paid, this reflects the recession).

The Clinton rates in force between 1993-2000 similarly increased the total income tax share paid by the wealthiest tax filers. Both decades also saw general increases in the adjusted gross income (AGI) share, or percent of total AGI, among wealthier groups. In 2008, however, many of the top income groups saw their share of total AGI decline for the first time since 2001.

More background: Between 1993-2000, the U.S. had five income-tax brackets, ranging from 15 percent to 39.6 percent. Since 2003, when the compleat Bush tax rates came into play, there have been six brackets, ranging from 10 percent to 35 percent. 

In 2000, you were in the top 1 percent of income earners if your AGI was $313,000 or more; you were in the top 5 percent if your AGI was $128,000 or more; you were in the top 50 percent with an AGI of $28,00. In 2008, the comparable AGIs were $380,000, $161,000, and $33,000 (all figures in nominal dollars).

Percent of Federal Income Tax Paid by Each Group

Year              Top .01 Top 1%   Top 5%   5-10%   Top 10% 10-25%  Top 25% 25-50%  Top 50% Bot 50%

2000
37.42% 56.47% 10.86% 67.33% 16.68% 84.01% 12.08% 96.09% 3.91%
2001
16.06% 33.89% 53.25% 11.64% 64.89% 18.01% 82.90% 13.13% 96.03% 3.97%
2002
15.43% 33.71% 53.80% 11.94% 65.73% 18.16% 83.90% 12.60% 96.50% 3.50%
2003
15.68% 34.27% 54.36% 11.48% 65.84% 18.04% 83.88% 12.65% 96.54% 3.46%
2004
17.44% 36.89% 57.13% 11.07% 68.19% 16.67% 84.86% 11.85% 96.70% 3.30%
2005
19.26% 39.38% 59.67% 10.63% 70.30% 15.69% 85.99% 10.94% 96.93% 3.07%
2006
19.56% 39.89% 60.14% 10.65% 70.79% 15.47% 86.27% 10.75% 97.01% 2.99%
2007
20.19% 40.41% 60.61% 10.59% 71.20% 15.37% 86.57% 10.54% 97.11% 2.89%
2008 18.47% 38.02% 58.72% 11.22% 69.94% 16.40% 86.34% 10.96% 97.30% 2.70%

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  • Restoras||

    So, what's with all the hissy-fitting from the left about taxes not being progressive enough?

  • ||

    They forgot that Social Security and Medicare are "contributions" rather than "taxes".

  • Team Blue||

    The numbers! They hurt my brain! Please make them stop!!!

  • typical progressive||

    "progressive enough" means the top 1% pay 100% of the taxes with 90% marginal tax rates (not 100% marginal rates, because the rest needs to go to the states and cities).

  • Mike M.||

    Exactly. The reality is that the United States already has one of the most progressive tax systems in the world, if not THE most.

    In most of the European countries, the middle class has a much bigger share of the tax burden than we do here.

  • ||

    Like trans-fats progressive tax systems do not exist. A perpetual fantasy of the left who consider "progressive" as another way of saying "be happy we did not take all of it."

  • ||

    But, you see, the rich didn't suffer enough. They must suffer.

  • JD||

    I'd settle for only Warren Buffet suffering.

  • ||

    No, no. Warren is a Good Rich. The Good Rich of the West.

  • robc||

    Any change of getting a table that displays properly? You know, maybe putting the top line inside the table? Is semi-competent html too much to ask for?

  • robc||

    s/change/chance/

  • ||

    Maybe if they didn't program in PHP. Fully object oriented languages are too much to ask for.

  • Derp||

    >Implying PHP isnt just HTML inside an echo"";

  • BakedPenguin||

    Programming a blog in Java seems a bit much.

  • Cyto||

    A real coder would have custom written his own blog HTML daemon in assembly using vi.

  • Yonemoto||

    I did that once, although I'll admit to doing it in nano.

  • ||

    You could use Python, or if you don't mind paying, use ASP.NET.

    PHP is for monkeys, and highly stoned flightless aquamarine waterfowl. And Warty.

  • Warty||

    I'm very proud that I never learned PHP. And much less proud that most of my recent coding has been done in MATLAB.

  • ||

    Jesus, I actually feel sorry for you.

  • BakedPenguin||

    PHP is for monkeys, and highly stoned flightless aquamarine waterfowl.

    Hey! I'm not highly stoned. Still working here.

  • ||

    The analysis is incomplete because it doesn't account for income growth.

  • ||

    The analysis is incomplete because it doesn't account for income growth.

    Not sure if you are being sarcastic or not, MP, but that is the basis of supply side economics. By lowering tax rates, investment is encouraged. Incomes rise, thus tax revenue collected increases.

  • Progressive||

    Just because it works doesn't mean it's right!

  • ||

    As illuminating as these figures are I would rather see a breakdown of percentage of all federal taxes collected from each income group. That would include income taxes, FICA taxes, excise taxes (tobacco, alcohol, gasoline, etc.), estate taxes, tariffs, fees (telecommunications and the like) and whatever else I'm missing.

  • robc||

    FICA and estate should be easy to do. Not sure how easy it is to break down excise/fees/tariffs that way.

  • ||

    The stats for how much gas, sugar, tobacco, cell phone use per income group are out there. Perhaps someone with more discipline and math skills than I has/will put it all together.

  • robc||

    Sounds like work.

  • ||

    A lot of work.

  • ||

    Don't forget the EITC! Fraudsters haven't.

  • Joe_D||

    No way. The data might come to the wrong conclusion. Leave the chart as is!, it supports my ideology.

  • ||

    Sadly, this attitude is all too common. Even among libertarians.

  • GILMORE||

    Trust me, the people at the BLS are definitely not any smarter than you...

    http://www.bls.gov/cex/#tables

    I, however, am... because *I already know where to find this shit* :)

    Thing you wanted was here, methinks ( suggestively known as the "CEX" - Consumer Expenditure report):

    http://www.bls.gov/cex/2009/Standard/income.pdf

    Problem here is a) they only define income classes up to, "70K and over", and b) only have estimates of spending by product/service class... not tax revenue by product class. Getting a gusstimate wouldn't be too hard (or too accurate*) by simply applying national tax averages to each product class as relevant (eg. tobacco, fuel, telecom services, etc)...multiplying that average against the per-unit spending averages, then by the number of consumer units. But still, all you'd end up with is "70K and up" versus the other income groups. Still could potentially prove interesting.

    I used to do this crap for a living btw: gather together boring Gvt/3rd party stats and tweak them in some fashion to get some derivative info, or to establish some kind of trend indicators.

    It was only 72.4% as boring as it sounds. :)

    ps. The methodology of the CEX (consumer expenditure survey) is based on sampling of self-reported spending; I think there's actually direct data that could be easily gathered on state-by-state tax receipts by product class. (though not via the BLS - probably throughy Census.gov's Economic Census reports) I know for instance you can get state-by-state tax revenues on alcohol and tobacco, or segmented by class of retail trade... and you could cross-reference that with tax receipts by income group. A hassle, but doable. One of the big problems with US Govt data is its never all in one place, with one set of definitions, in a convenient database format... Its always a cluterf*ck of different formats, income groups, definitions, time periods, etc...

    *[Canada, by constrast, has cool little thing called http://www.statcan.gc.ca/start-debut-eng.html .... pretty much everything in one place. Damn canadians. They always make Government-run-stuff look *good*]

  • ||

    Not the same, but the Sunday Washington Post had an interesting article about people who made 250K and how much in total taxes they would pay in different regions. Whoa boy, I am glad I don't pay property taxes in Connecticutt.

  • Progressive Liberal Says.,..||

    ""Typical libertarian shill for corporate plutocrats, thinking you can convince us with your "numbers"... We ALREADY have a reality, and don't need your 'facts' and 'data' to complicate things. Money is fundamentally *bad*, and people who have too much of it must have stolen it from the poor, who are noble by virtue of their victimhood. We need more government to rectify the injustices of the corporate system which bleeds the poor and enriches conservative business-people, who through fincial gimmickry and shady backroom dealings conspire to consolidate power away from right-thinking citizens and their unions, take away their rights, and if possible also destroy the environment and give everyone cancer so they can sell them overpriced, privatized cancer drugs in their corporate hospitals. All anyone needs to know about the world can be gleaned from three writers: Howard Zinn, Noam Chomsky, and Naomi Klien. However, if reading is too much work, just listen to Amy Goodman's Democracy Now and repeat things she says.""

  • ||

    So to summarize... Money=bad. Excess quotes=good. Do I have it right?

  • ||

    Any change of getting a table that displays properly?

    Click the link.

    It still made me cross-eyed, but maybe you'll do better.

  • ||

    "Joe Biden used to say that it was "patriotic" to ask the rich to pay "their fair share" in taxes."

    And I say it is virtuous for the hot, nubile, and supple cheerleaders to f*ck the horribly grotesque, e.g., fresno dan, - just their fair share of f*cking the ugly ... equlity in the sex realm. Of course, I absolutely will not f*ck any fat chicks - thats entirely different. O, and I won't f*ck anybody uglier than me (which is entirely theoretical as I don't think it is possible to find someone more grotesque than me).

  • ||

    I'm pretty grotesque, so send some of those Hawt Bulldawg Chicks my way.

  • Mike in PA||

    No, No, No...

    You must not measure them on what government got from them, you must measure them on what they have left!

    You see, the share that they have left is so much greater, that one can hardly call it fair. If it were fair, anyone making more than me would be taxed down to my level and anyone making less than me should just work harder.

  • robc||

    Bottom chart from link showed me something I was looking for, which shows change in progressivity with the changes.

    Here are some points, lots removed for clarity - Income tax RATE by group
    Year Top1% Top10% Top50% Bot50%
    1990 23.25 18.50 14.36 5.01
    2000 27.45 22.34 16.86 4.60
    2008 23.27 18.71 13.65 2.59

    While the Bush Tax Cuts did lower the rates on the top groups, it just took them back to 1990 levels (basically, undid the Clinton tax increase). The bottom half is paying the lowest rate "ever" (at least back to 1980). The middle class and upper middle class benefitted greatly, also the lowest rates since 1980.

  • robc||

    The between 25%-50% group, fell from 9.28% in 2000 to 6.75% in 2008. That is the middle class group, those with an AGI of 33k to 67k.

  • Cyto||

    Wouldn't that be the lower half of the middle class? Shouldn't "middle" include 25%-75%, you know - the part in the middle?

  • robc||

    You would think so. However, I think a large part of the bottom half is retired households. Since they arent working or trying to and living off savings, that shifts things.

  • ||

    Can we get some kind of permanent link to this table so that when trolls like Tony come around, we can just paste a link to the table in our comment box rather than waste pixels and electrons arguing with them like we did yesterday.

  • robc||

    http://www.taxfoundation.org/news/show/250.html

  • Chris||

    Is there an argument that the reason the top income earners are paying more in federal income taxes is increased income disparity? Not making any points, really just asking.

  • robc||

    That would be an argument, which is why I posted the rate that is being paid. The top groups rate fell as a percentage much less than for the lower groups, so that caused the increase, not income disparity.

  • robc||

    In fact, the # to get into the top 1% fell in 2008 while the # to get into top 25% or top 50% rose.

  • sarcasmic||

    The problem is that rich people exist, and that makes poor liberals feel inadequate about something besides their tiny genitalia.
    The solution is to keep taxing the rich until they're not rich anymore.
    Then the poor liberals with inadequate genitalia won't feel bad that there are people who have more wealth than them.

  • FleeingCali||

    But they'll still feel inadequate about their genitalia! Shouldn't we also cut the over-endowed down to size just to be safe?

  • sarcasmic||

    There is unrest in the forest,
    There is trouble with the trees,
    For the maples want more sunlight
    And the oaks ignore their pleas...

  • Steve||

    Somebody had to say it...

  • ||

    Evil Bush Tax Rate Made Rich Bastards Pay More Taxes

    In 2000, for instance, the top 1 percent of income earners paid 37.42 percent of all income taxes collected.

    High income earning and being rich are not necessarily the same thing. Being rich is a measure of wealth not income. You can be a rich bastard with real estate worth gazillions and pay no federal taxes if you don't generate income from said real estate.

  • robc||

    Interesting footnote from the link - IRS considers EITC to be a spending program, not a negative tax, so if EITC was included, the percent of tax paid by the upper income groups would be even higher.

    Im okay with the IRS considering it a spending program. Now if we could just get congressmen to stop referring to a tax cut as an expense.

  • ||

    "Whatever else you want to say about the Bush tax rates, they made the wealthy pony up more of the whole."

    That doesn't fit in with my preconceptions, so it can't be true.

  • Robert Enders||

    Why would the percentage that the wealthy pays go down during a recession? I would would expect that most people would be earning less income and paying taxes, but wouldn't there be more unemployed people who stopped paying taxes altogether?

  • ||

    This is just an educated guess, but I can think of a couple possible contributing factors.

    If the wealthy are paying several times what the bottom 25% are paying, then if you lay off twice as many poor, you're still gonna get a bigger dip coming from the wealthy. Also, the wealthy are probably better equipped to stay unemployed longer.

    Another contributing factor might be wealthy people tend to work in more highly cyclical industries--with Wall Street and the banking industry being likely suspects. Layoffs on Wall Street are often some of the first casualties of a recession--and if those people were paying a disproportionate share of the taxes, tax receipts are gonna take a hit many more times the hit we get from poor people being laid off.

  • ||

    A lot of the people out of work around here were high income earners--self employed in construction, finance, the mortgage industry, importers, and people who provide products for the wealthy such as asset management, tax prep, jewelers, furriers, and other high end retail. They saw their businesses tank, and a lot of them are either working jobs for less pay (and are now in a much lower tax bracket), or are on the sidelines living off of investment income or savings (and are now also in a much lower bracket).

  • MNG||

    "The Clinton rates in force between 1993-2000 similarly increased the total income tax share paid by the wealthiest tax filers."

    How does that fit with the Laffer Curve?

  • ||

    Ever heard of the internet?

  • ||

    Even the idea that the internet made the 90's boom is a myth. It was record low interest rates after a period of record high interest rates. Basically, capital was built up and then quickly burned through.

  • Alan Vanneman||

    "Whatever else you want to say about the Bush tax rates, they made the wealthy pony up more of the whole."

    Sorry, Nick, your grasp of causality is less than optimal. The top 10% (and the top 1% and the top 0.1% and the top 0.01%) all paid a greater share of the total income tax burden because THEY MADE MORE MONEY.

    Well, then, does that mean that the Bush tax cuts stimulated economic growth, as the supply siders claim? No, because economic growth was GREATER DURING THE CLINTON ADMINISTRATION, WHEN TAXES ON "THE RICH" WERE HIGHER.

    What's happening, as many people (at other sites) have noted, is that the more money you make, the more your income rises; the less money you make, the less your income rises. That is to say, The rich are obtaining an increasingly disproportionate share of the economic pie.

    For example: "Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez."

    http://www.cbpp.org/cms/index.cfm?fa=view&id=2908

  • ||

    "The top 10% (and the top 1% and the top 0.1% and the top 0.01%) all paid a greater share of the total income tax burden because THEY MADE MORE MONEY."

    That's Gillespie's point--I don't see how that contradicts Gillespie's point.

    "Well, then, does that mean that the Bush tax cuts stimulated economic growth, as the supply siders claim? No, because economic growth was GREATER DURING THE CLINTON ADMINISTRATION, WHEN TAXES ON "THE RICH" WERE HIGHER."

    The recession was over by '92 or so. I don't think anybody's claiming that lowering taxes as we fall headfirst into a recession is necessarily gonna raise tax receipts--all other factors included.

    If you raise taxes as you're coming out of a recession, you may very well end up with more tax revenue than you had before--for a little while. I think the point is that lower taxes brings about more economic growth and hence more in the way of tax receipts--other things being equal.

    In other words, just because you raise taxes just as you're coming out of a recession, that doesn't mean you're necessarily gonna get less in the way of tax receipts than when the economy was in recession. It just means that you didn't get as much as you might have over the long run if taxes had been lower and you'd had more economic activity.

    I mean, surely you're not suggesting that raising taxes doesn't have any impact on the level of economic activity--are you?

  • Invisible Finger||

    No, because economic growth was GREATER DURING THE CLINTON ADMINISTRATION, WHEN TAXES ON "THE RICH" WERE HIGHER.

    And Vanneman has the nerve to rip The Jacket for his grasp of causality??? I mean, could there have possibly been something else working in tandem with higher tax rates? Something like, and I'm just making this up, say.... massive increases in leverage?

  • ||

    I think he's conflating the idea that we get more than we would have otherwise with the idea that we always get more in absolute dollars.

    Raise taxes on the first year out of a recession, and you may get more dollars than came in during the recession--whether you would have received even more with lower tax rates is the question.

    I don't think he's conflating them on purpose or anything--it's kinda hard to keep those two ideas separate. It can be confusing.

    I wish people would start connecting these ideas a little more with unemployment personally. Cutting income tax rates makes people less expensive to hire, and when we're dealing with high unemployment--not cutting the cost of employing them via tax cuts is absurd. Considering letting taxes go higher and raising the costs of hiring them?

    That's beyond absurd. That's surreal. Raise the cost of paying people their take home pay?! At a time like this? Further evidence that the Obama Administration had no idea what it was doing.

  • Invisible Finger||

    Considering letting taxes go higher and raising the costs of hiring them?

    Seems to be the standard labor union position. And you say Obama doesn't know what he's doing...

    Mind you, Clinton's main achievement was relaxing financial regulation - arguably the ONLY area in which the libertarian position favors increased regulation (you can only achieve so much leverage with sound money and banking with a reasonable requirement of reserves - the Fed covers up a lot of fraudulent banking practices; the "growth" during the Clinton years was in essence only in the financial sector).

  • ||

    "Seems to be the standard labor union position. And you say Obama doesn't know what he's doing..."

    You're right of course--and I need to be reminded of that sometimes.

    Everything Obama's done makes a lot more sense when you look at it from the perspective of unionized labor--like the UAW.

  • ||

    "Further evidence that the Obama Administration had no idea what it was doing."

    So I suppose I should restate that as, "Further evidence that the Obama Administration doesn't give a damn about anybody that isn't funneling cash into his reelection campaign"?

  • Rrabbit||

    I don't think any such statement can be made with any confidence. The various US statistical numbers such as GDP, inflation and whatever else have been faked to a ridiculous extent. As a result, you cannot conclude anything from the official numbers.

  • ||

    Why depend on the official numbers?

    You don't think interest rates can show us where inflation is and where it's headed?

    Take the difference between two treasuries with the same maturity--one that's not protected for inflation and a TIPS. What's the difference between them? What does that tell us? You don't think that's a good estimate of inflation?

    What about the price of the CRB index? More than $10 trillion in commodities trade over the counter every year. You think how much they go for is a secret?

    What about the relative price of currencies that are traded every day? What about the price of gold?

    The government's numbers are just one indicator among many.

  • Rrabbit||

    The interest rates were influenced by the fake (lower) inflation numbers published by the government.

    It is evident that long term the US dollar has lost value compared to other currencies, and from that one can conclude that inflation in the US was higher. But on any given day exchange rates reflect other factors rather than price parity.

  • Rrabbit||

    Also, the published numbers by other governments are fake, too. They just typically are not as much faked as the current US numbers.

  • ||

    "I don't think anybody's claiming that lowering taxes as we fall headfirst into a recession is necessarily gonna raise tax receipts--all other factors included."

    If I could get everybody in the world's attention for five minutes? I'd spend it talking about the economic cycle. I think a lot of our disagreements about stuff would disappear if people just understood the basics of the economic cycle.

    Take a look at this...

    http://en.wikipedia.org/wiki/Economic_cycle#Identifying

    Look at the two charts on the right.

    You see that? You see the long term trend 1954 to 2005? People who want to raise taxes all the time--I think that's the only picture of economic growth they have bouncin' around in their heads. That's the long term look backwards.

    You see the deviations from the trend graph, 1954-2005, just below that? That's where we are at any particular point in time. That's where we are now.

    What you get in terms of tax receipts is a function of where we are on that deviations graph...

    If you raise taxes in the midst of an upswing, you might get more in tax receipts than you did the year you were in recession--but you'd have gotten even more in tax receipts if you were higher up on that economic activity graph.

    No one can foresee or control which way that graph is going more than a few months out with anything like useful, practical accuracy. It's direction and movement surprises the hell out of the brightest, most highly motivated minds Western civilization has to offer--all the time!

    ...but one thing is for certain--higher taxes push us farther down all of those deviation slopes than where we would be otherwise. It's as simple as that.

  • Red Rocks Rockin||

    How much of this was due to the housing bubble and the value of real estate going through the roof?

    Also, why are they not showing the 1970-75 period in there? Would that undermine the thesis somehow? Also, in Figure 2, it shows the 1% income share climing rapidly during the dot.com boom, then plummeting during the bust.

    Do you think it might be entirely possible that the whole reason these disparities exist aren't because of the wealthy hoarding a greater share of the M3, but because of the massive credit expansion that took place for 35 years, after the Oil Crisis and inflation sent the economy into a near-decade-long funk?

  • ||

    "That is to say, The rich are obtaining an increasingly disproportionate share of the economic pie."

    I hate to break this to you—numerically-challenged as you appear to be—but that is all but an arithmetic identity. It should be obvious that for income inequality to remain a constant between low- and high income earners, low income earners need relatively outsized annual raises.

    Fire up Excel and use $20K and $100K per year. The $20K guy needs an annual 9% raise to keep pace with the guy making $100K who gets a 3% annual raise. Obviously this is not going to happen, therefore, ‘income inequality’ is virtually certain to increase. We should be no more surprised by that then by the sun rising in the East every day. But then, there are those who wake up to a new world every morning.

  • ||

    pdquig -- what you say is true if the absolute difference is the measure. If the measure of "unfairness" is a ratio, then it is constant. 100K guy makes 5x what 20K guy does, increase each income by 10%, then 110K guy still makes what 22K guy does.

  • ||

    I confess to being confused by taxes. For eight years I was pretty sure I knew where the Democrats stood on taxes. Clinton tax rates: Gold standard. Bush tax rates: he's stupid doncha know. Just two years later the leader of the Democratic party is saying that he prefers the Bush tax rates for 98.5% of the people and 75% of the money raised. Huh? On Monday you're calling something a complete disaster and by Friday it's part of your principles?

    The Democratic critics have it right. Basic consistency REQUIRES the Democrats to let the entire Bush tax cut package expire. How else can the party be taken seriously going forward?

  • ||

    None of this refutes that Clinton rates would have extracted more cash from the pockets of the rich than the Bush rates, and that the Obama plan to go back to Clinton rates above $250K would extract more cash from the pockets of the rich than the compromise now in the works.

    Relative shares is one thing; absolute amounts is another thing. The Reasonoids are trying to be cute by obscuring the difference between the two.

  • Sean W. Malone||

    Actually, it is quite clear that Gillespie did NOT confuse the two. The whole point is that the poorest people in the US got even more in transfer payments sent their way (ie: their already negative tax rate grew) and the richest paid a higher proportion of overall taxes.

    Yes, their tax burden as a percentage of their own income was/is lower, but as a percent of all tax revenues, they account for a higher share than before.

  • Sean W. Malone||

    Actually, it is quite clear that Gillespie did NOT confuse the two. The whole point is that the poorest people in the US got even more in transfer payments sent their way (ie: their already negative tax rate grew) and the richest paid a higher proportion of overall taxes.

    Yes, their tax burden as a percentage of their own income was/is lower, but as a percent of all tax revenues, they account for a higher share than before.

  • Sean W. Malone||

    I wonder why I keep writing about these kinds of topics several days before the pros get around to it...

    http://seanwmalone.blogspot.co.....-cuts.html

    Anyway... If you want to talk about causality, Vanneman, economic growth in the 90s began with a little thing I like to call: "The Internet". Not with Clinton, or his marginally higher tax rates.

  • Invisible Finger||

    The Bush tax cuts were smaller than the Bush tax increases.

  • ||

    Remarkable that the ad panel was shilling "Invega Sustana", a once monthly injectable for schizophrenia.

    It's like they knew what type of person would be attracted to this story. ;^)

  • ||

    One of the crappier medications available, I might add. I'm an MD, and the medication is basically a patent extension of Risperidone, with no significant advantages, and only a theoretical advantage for people with liver problems.

    Sorry to go off on a rant, but Reason needs to get a better class of advertisers. This med is a dog.

  • Rrabbit||

    I consider those tables misleading. What needs to be compared is taxes as percentage of income, where income includes income that is not taxed.

  • rho||

    People trot this out all the time, but whoever pays whatever percent of federal income tax is mostly irrelevant.

    If you're not counting payroll taxes, then you have an incomplete picture. Even if you do include payroll taxes, it's made even harder because half of the payroll tax is "paid" by the employer.

    Put those numbers together, and then let's see where the bulk of total government revenues comes from.

    (I suspect that it comes largely from the vast middle class. I suspect this is the case because every couple of years we get this biiiiig fight about marginal tax rates, which smells like a distraction to me.)

  • Slinky Spring Milt||

    Remember the days when only the rich had airbags in their cars? Today, the airbags on a Land Rover and a Lexus cost the same as the airbags on a Cobalt and a Corolla.

    You can double the income tax rates on the rich and the remaining classes will STILL have more of their wealth destroyed via regulatory burden.

  • Brett L||

    Considering the top rate is 36% -- 2.5x the full payroll tax, and it starts in at $125k/person, it should be pretty easy to figure out how much income it takes for a top bracket to replace a median income payroll tax. If the median is $65000/family, each additional 65000/2.5 ($26k) above the top rate "pays" the same as a median income person. So each $100k a person earns once they get to the top bracket is 4 family payroll tax equivalents. Approximately.

  • Rrabbit||

    That "medium income family" pays income tax, FICA tax, and Unemployment tax.
    You forgot some of those.

  • Brett L||

    I pretty clearly stated that I was just doing the payroll equivalent for simple numbers. Its too difficult to do a "back of the envelope" on median family income... too many deductions, etc. Thus "payroll equivalents". If you want to argue that a million dollar a year guy only pays for 12 median families instead of 35 median payroll tax equivalents, okay. Just remember that every additional million pays for 39 median payroll tax families.

  • Rrabbit||

    But yours isn't the payroll equivalent.
    You claim that the "medium income family" pays 14.4% in "full payroll tax".
    FICA alone is 12.4% for Social Security plus 2.9% for Medicare.
    Don't tell me that half of that doesn't exist.

  • Partisanshit||

    Why are these called BUSH TAX CUTS?? They were passed by both Democrat-controlled houses of Congress.

  • ||

    No, the Republicans were in control of both houses from 1994 to 2006. The Bush tax cuts were put into effect in 2003.

  • ||

    People trot this out all the time, but whoever pays whatever percent of federal income tax is mostly irrelevant.

    I disagree.

    Anytime you have a tax that is paid mostly by a small minority, in order to fund payments that go mostly to the larger number who don't pay such a tax, you have a disaster in the making.

  • ||

    Disaster in what way? Not being snarky, by the way, but I hear people say this sort of thing all the time, and I never quite get what they mean by it.

  • ||

    A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.

    Alexis de Tocqueville

  • robc||

    Its simple.

    Lets take a smaller example. A class of 30 kids.

    Lets say kids 1-5 have to buy this weeks cupcakes and 6-30 dont.

    We vote on which cupcakes to buy, 1-5 want to buy the tasty but low frill cheap cupcakes and 6-30 want the expensive ones with a ton of icing.

    If the purchases rotates thru the course of the weeks, this wouldnt be a problem, but if it always 1-5 buying, and everyone gets to vote on what is bought, then 1-5 are going to get soaked for the pricy cupcakes.

    if 1-25 were buying and 26-30 were eating for free, it wouldnt be a big problem.

    However, to match up with the tax numbers, kids 1-6 are paying for 85% of the cupcakes, and kids 7-12 are paying another 12%, and 13-30 only pay 3%. But everyone gets an equal vote.

  • robc||

    A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.

  • ||

    I assume they mean the "disaster" is the imposition of a plutocracy (power provided by the wealthy). When that happens the wealthy will assert their ownership of the system = a disaster. There's no way plutocracy leads to equality.

  • ||

    This analysis is horrible. It completely ignores the income growth of the rich and income shrinkage of the poor. During most of this time frame there was a very noticeable growing gap between the income levels of the rich and the poor.

  • ||

    The poor were in the pool! The shrinkage isn't their fault!

  • ||

    We should keep in mind that the real goal of taxation is to pay for the government that is necessary to fulfill the requirements set forth in the Constitution and no more. Too often conservatives cheer when lower tax rates actually boost government revenues. However, when government expands beyond the required functions, liberty must retreat. Indeed, our goal must be to maximize liberty, and not to tune the tax rates for maximum government revenue.

  • Yes, I'll cheer||

    WTF????

    If lowering tax rates boosts government revenue, then the tax rates can be lowered EVEN MORE!

  • ||

    Lemme throw out my tax/finance reform plan (again), just for yux.

    The main objective is transparency, in the belief that if people understood what they were paying and wahat it was going for, the politics of tax-n-borrow-n-spend might change.

    (1) All transfer payments (SocSec, MA, unemployment benefits, etc.) are fully funded every year by a flat tax on earned income (the Transfer Tax). There is no hidden "employer" portion of the Transfer Tax; it is completely transparent to the taxpayer.

    If transfer payments go up, then the Transfer Tax increases to fund them. Thus, for example, every time Congress votes to extend unemployment benefits, the Transfer Tax goes up to fund them.

    (2) Government operations are fully funded every year by an income tax (this could be replaced at some point by a Fair Tax or whatever). Operating expenses will include interest on the debt.

    The income tax cannot be paid via withholding; every taxpayer has to write a check every quarter (or annually, if they prefer).

    (3) Only capital expenditures by government can be funded by borrowing.

  • ||

    I'm not sure I understand how that's supposed to stop the rich from getting richer.

    Oh, I think I see the issue here--you're being rational. But the point of our tax system isn't to be rational and do what's best for the country...

    It's to soak the rich! That's the whole point of having a tax on income--soaking the rich. Rational?

    They don't care about no stinkin' rational!

  • The Devil Inchoate||

    Yes, I like this plan. There is no "lock box", there is no "trust fund". Pay as you go. Make it transparent.

  • robc||

    As far as #2, I would print each taxpayer a book of payment slips with their tax form, they pay the first one in April with submission of their income tax form and the other 11 are for May-March.

  • ||

    what is interesting is that the top 10%, which you only need $113k+ of income to be in, had 45.77% of all income but paid 69.94% of all taxes

  • Rrabbit||

    Not 45.77% of all income. 45.77 of all taxable adjusted gross income.

  • ||

    which is what we are comparing

  • FleeingCali||

    I blame the Robin Hood story for the 'progressive' tax mindset. Generations of kids brought up to believe it was noble and heroic to steal from the rich and give to the poor.

    I wonder if I was the only kid that wondered if some of the people the Robin's merry men stole from didn't deserve it.

  • robc||

    Two things wrong with that:

    1. In the reasonably modern stories, Robin Hood stole from the government and gave to the poor.

    2. In the original Robin Hood stories, he was a highwayman who stole from whoever, but the rich == government at the time, but he gave to ... wait for it ... his own fucking self. But he was a hero of the everyman.

  • Sean W. Malone||

    It bugs me that people always forget that the rich people Robin Hood supposedly stole from - in literally any incarnation of the story since about 1920 - was the tax-collector (which was part of the job of "Sheriff") and his cronies.

    It would be a very libertarian, Ragnar Danneskjöld-y, idea if people had even the slightest amount of historical context and reading comprehension.

    And while I'm bitching about reading comprehension, why do High School counselors always point to Robert Frost's "The Road Not Taken" as if it is a positive, rather than a generally depressing, statement on individuality?

    Frost says:
    "I shall be telling this with a sigh
    Somewhere ages and ages hence:"

    With a sigh... Not "with joy" or "with a manly cry of awesomeness".

  • Puxico||

    Ah, but remember - in reality, Robin Hood actually stole from the establishment and gave to the people who were suffering underneath their reign.

  • GroundTruth||

    This is a debate about how many angels can dance on the head of a pin! The fact is, those making more pay a much larger share of their income in taxes. Period!

    One rate (~15%), no deductions! Enough of the frakking redistribution and social engineering! This simplifies the IRS, stops causing outrage-induced heart attacks in April, and frees up about a bazillion CPAs to do productive work!

  • DDavis||

    I'm really tired of supposed libertarians lapping up fundamentally dishonest statistics about how those with a high income pay a large percentage of the total collected income taxes.

    If you want to make that an honest statistic about who is paying what in taxes, include social security and medicare taxes. Or admit you don't really care about the truth.

    I think the analysis is fundamentally flawed in the first place. How about a graph with brackets of *wealth*, showing what percentage of their wealth each bracket pays in taxes?

    Being rich or poor isn't really about income, it is about wealth.

  • ||

    Drink!

  • robc||

    I should have taken your suggestion instead of responding, now I need a drink.

  • robc||

    Did you read any posts above? We were discussing that more than 3 hours ago, where is the dishonesty?

    And, you are right about wealth v income. However ITS THE FUCKING INCOME TAX NOT THE FUCKING WEALTH TAX YOU FUCKING MORON.

    I expect an income tax to tax income. Crazy.

  • ||

    But the real rich people don't call their income income. They call it capital gain and they pay a much lower tax. That is why I think the above table is mis leading. As far as I can tell, it doesn't consider income from investments.

  • Rrabbit||

    While such a table might be interesting, wealth should not be taxed. How would that be supposed to work? Lets say I own 100 million, invest those in the stock market, it is a down year, and I lose ten million. Am I then supposed to pay a few million of "wealth tax"?

  • robc||

    Thats the way property tax works now.

    But, yeah, I agree with you, wealth shouldnt be taxed, which is, of course, the problem with the estate tax.

  • Rrabbit||

    I wouldn't use the word "works" to describe property tax in the US.

    An estate tax is a different beast.
    Consider Jim, who is a much smarter investor than I am. He invests his 100 million in the stock market, and five years later he has 200 million. He never cashes out, and thus those extra 100 million are never taxed. Then Jim dies. I think that those extra 100 million then should be taxed.

  • ||

    Rrabbit: the gains are taxed then, at death, in the deceased's last income tax return. Then the total amount is taxed again as part of the estate, as I understand it. The heirs, if they inherit the stock in kind, have a new basis for their cap gains later.

  • robc||

    A wealth tax would be the exact opposite of a consumption tax. A consumption tax encourages saving and investing by allowing the money to compound tax free. A wealth tax encourages people to SPEND SPEND SPEND, so they dont have anything left at the end of the year.

  • robc||

    Heck, the spending couldnt even be on durable goods, because those would count as wealth. The travel/vacation industry would love it.

    December would be a nation-wide Brewster's Millions.

  • DDavis||

    By what principle should the labor that creates wealth should be taxed, but the owning of wealth should not?

    AS for practicality, we have property taxes on real estate already. For corporations, particularly those in the stock market, diluting the stock and selling it seems pretty straightforward.

  • Invisible Finger||

    Why would I work if it didn't add to my wealth? I'd just be a subsistence farmer or a hunter-gatherer then.

    The tax on labor is merely a pre-paid wealth tax.

  • Rrabbit||

    By the same principle that your actual income from your labor is taxed, rather than some potential income the IRS assigns to your theoretical ability to work.

  • ||

    many believe you should

  • GroundTruth||

    Why not head tax? Tax the value of each human life. I assume that your life to you is what my life is to me. We all pay the same amount to the Feds to run the military, and the state / county / town for police and courts, and leave everything else up to the individual?

    Your kids? You had them, you feed and educate them!

    Your retirement? Start saving now!

    Your medical costs? Take a gamble, I don't care, so long as I don't have to pay if you loose the bet.

    etc.

    etc.

  • GroundTruth||

    Be honest DD, you think that it's unfair that the 25% of the population who are paying for 85% of the Federal government aren't paying their fair share. They ought to be paying 90% if we up the top bracket? Why stop there? Why not push the rate another 5% and be done with it, and have them pay the whole bleeping thing?

  • ||

    By what principle should the labor that creates wealth should be taxed, but the owning of wealth should not?

    Start thinking of wealth as property, and labor that creates wealth = income = economic transactions, and see if that helps.

    Or, start looking at wealth as income at rest, the accumulated residue of labor that creates wealth, and see if there is any moral reason to wait until the wealth has rested awhile to tax it, as opposed to taxing it when acquired.

  • Tony||

    Shut the fuck up, do what Obama says, and pay your goddamn taxes.

  • Chad||

    Externalities!

  • shrike||

    High taxes and force health insurance are good. You fucking Christ-fag Bushpigs NEED to be soaked for every penny we can get out of your fucking fat wallets.

  • Max||

    ARFARFARFARFARFARFARF!!!!!!!!!!

  • Apostate Jew||

    Mister Bottom of the top 1 percent is 67,000 ahead on his AGI and I'm supposed to think he is oppressed by taxes? Maybe his share of federal taxes has gone up slightly because he's making so much goddam money?

  • Jessica||

    Great job on the beautiful, easy-to-read table of percentages! Note to the editor - in this case, a graphic would probably communicate more information, *much* more clearly.

  • Pragnanz||

    What happened to common sense. 40% of nothing is nothing. 40% of a billion is a hell of a lot. We all pay the same percentage of our income. If you have little you pay little, if you have a lot you pay a lot. The "overall percentage" says nothing.

  • G-Man||

    They already have a hire tax rate. The Germans took the wealthy people money also. How much do you want to Steal. A flat tax is the only way to go. That would make most of the IRSS
    (SS = An elite quasi-military unit of the Nazi party that served as Hitler's personal guard and as a special security force in Germany and the occupied countries.)

  • ||

    THE TAX SYSTEM EXPLAINED IN BEER

    Suppose that every day, ten men go out for beer and the bill for all ten
    comes to $100...

    If they paid their bill the way we pay our taxes, it would go something
    like this...

    The first four men (the poorest) would pay nothing.
    The fifth would pay $1.
    The sixth would pay $3.
    The seventh would pay $7..
    The eighth would pay $12.
    The ninth would pay $18.
    The tenth man (the richest) would pay $59.

    So, that's what they decided to do..

    The ten men drank in the bar every day and seemed quite happy with the
    arrangement, until one day, the owner threw them a curve ball. "Since you
    are all such good customers," he said, "I'm going to reduce the cost of
    your daily beer by $20". Drinks for the ten men would now cost just $80.

    The group still wanted to pay their bill the way we pay our taxes. So the
    first four men were unaffected. They would still drink for free. But what
    about the other six men ? How could they divide the $20 windfall so that
    everyone would get his fair share?

    They realized that $20 divided by six is $3.33. But if they subtracted
    that from everybody's share, then the fifth man and the sixth man would
    each end up being paid to drink his beer.

    So, the bar owner suggested that it would be fair to reduce each man's
    bill by a higher percentage the poorer he was, to follow the principle of
    the tax system they had been using, and he proceeded to work out the
    amounts he suggested that each should now pay.

    And so the fifth man, like the first four, now paid nothing (100% saving).
    The sixth now paid $2 instead of $3 (33% saving).
    The seventh now paid $5 instead of $7 (28% saving).
    The eighth now paid $9 instead of $12 (25% saving).
    The ninth now paid $14 instead of $18 (22% saving).
    The tenth now paid $49 instead of $59 (16% saving).

    Each of the six was better off than before. And the first four continued
    to drink for free. But, once outside the bar, the men began to compare
    their savings.

    "I only got a dollar out of the $20 saving," declared the sixth man. He
    pointed to the tenth man,"but he got $10!"

    "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too.
    It's unfair that he got ten times more benefit than me!"

    "That's true!" shouted the seventh man. "Why should he get $10 back, when
    I got only $2? The wealthy get all the breaks!"

    "Wait a minute," yelled the first four men in unison, "we didn't get
    anything at all. This new tax system exploits the poor!"

    The nine men surrounded the tenth and beat him up.

    The next night the tenth man didn't show up for drinks, so the nine sat
    down and had their beers without him. But when it came time to pay the
    bill, they discovered something important. They didn't have enough money
    between all of them for even half of the bill!

    And that, boys and girls, journalists and government ministers, is how our
    tax system works. The people who already pay the highest taxes will
    naturally get the most benefit from a tax reduction. Tax them too much,
    attack them for being wealthy, and they just may not show up anymore. In
    fact, they might start drinking overseas where
    the atmosphere is somewhat friendlier.

    David R. Kamerschen, Ph.D.
    Professor of Economics.

    For those who understand, no explanation is needed.
    For those who do not understand, no explanation is possible.

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