Posted on 12/06/2005 8:33:51 AM PST by Marxbites
Who pays the taxes Dec 6, 2005 by Bruce Bartlett ( bio | archive | contact )
Email to a friend Print this page Text size: A A A few weeks ago, the Internal Revenue Service released data on tax year 2003. They show that the top 1 percent of taxpayers, ranked by adjusted gross income, paid 34.3 percent of all federal income taxes that year. The top 5 percent paid 54.4 percent, the top 10 percent paid 65.8 percent, and the top quarter of taxpayers paid 83.9 percent.
Not only are these data interesting on their own, but looking at them over time shows that the share of total income taxes paid by the wealthy has risen even as statutory tax rates have fallen sharply. A growing body of international data shows the same trend.
On the first point, we see that in 1980, when the top statutory income tax rate went up to 70 percent, the share of income taxes paid by the top 1 percent of taxpayers was just 19.3 percent. After Ronald Reagan's tax cut of 1981, which reduced the top rate to 50 percent -- a massive give-away to the wealthy according to those on the left -- the percentage of income taxes paid by the top 1 percent rose steadily.
By 1986, the top 1 percent's share of all federal income taxes rose to 25.7 percent. That year, the top statutory tax rate was further cut to 28 percent -- another huge-give-away, we were told. Yet the share of income taxes paid by the top 1 percent continued to rise. By 1992, it was up to 27.5 percent.
Of course, it would be a mistake to conclude that tax increases will not raise the wealthy's tax share or that tax rate cuts always will. Nevertheless, it is remarkable that the percentage of federal income taxes paid by the top 1 percent of taxpayers almost doubled during a time when the top income tax rate fell by half.
A common liberal retort to these data is that they exclude payroll taxes, which are assumed to be largely paid by the poor. However, it turns out that when one includes payroll taxes in the calculations, it has far less impact on the distribution of the tax burden than most people would assume, because the wealthy also pay a lot of those taxes, too.
In a 2004 paper presented to the American Statistical Association, IRS economists Michael Strudler and Tom Petska calculated percentiles data that included both income taxes and Social Security taxes. In 1999, the top 1 percent paid 23.3 percent of combined payroll and income taxes, the top 10 percent paid 52.2 percent, and the top 20 percent paid 68.2 percent.
In recent years, a number of foreign countries have also started publishing tax shares data. They show the same trend of higher and higher burdens on the wealthy even when tax rates are cut sharply.
For example, according to Her Majesty's Revenue and Customs, the share of total income taxes paid by the top 1 percent of taxpayers was 11 percent in the United Kingdom in 1979, when the top income tax rate was 83 percent. Prime Minister Margaret Thatcher cut that rate to 60 percent, and by 1987 the share of income taxes paid by the top 1 percent had risen to 14 percent. The top rate was cut again to 40 percent, where it still stands, and the share of income taxes paid by the top 1 percent continued rising to a current level of 21 percent.
Statistics Canada recently released a study looking at tax shares in that country. It shows that the share of federal income taxes paid by the top 10 percent of taxpayers reached 52.6 percent in 2002 -- almost exactly the same as is paid by the top 10 percent in the United Kingdom. However, the top income tax rate in Canada is just 29 percent. (Provincial tax rates in Canada are very substantially higher than among U.S. states.)
Finally, we now have data for Australia from the Australian Taxation Office. In 2003, they show the top 5 percent of taxpayers paying 30.2 percent of all income taxes, the top 10 percent paying 41.8 percent, and the top 25 percent paying 63.8 percent. But the top income tax rate in Australia is 47 percent. Thus we see that the country with the highest top rate also brings in the least amount of total income tax revenue from its richest citizens in percentage terms.
At some point, those on the left must decide what really matters to them -- the appearance of soaking the rich by imposing high statutory tax rates that may cause actual tax payments by the wealthy to fall, or lower rates that may bring in more revenue that can pay for government programs to aid the poor? Sadly, the left nearly always votes for appearances over reality, favoring high rates that bring in little revenue even when lower rates would bring in more.
That's what I'm trying to figure out. It's a theoretical question . . .
Just as important as who pays is that TOTAL receipts from taxes are soaring.
Not only did we pay down the deficit to zero during Jerkoff's tenure, but we'll do it again as the economy booms.
Lowering taxes makes sense.
Your point genius?
Because the point of the article was in response to the leftmedia etc, who keep the "tax cuts for the rich" mantra front and center.
They are liars. The lowest brackets got the biggest percentage cuts, and millions got off the rolls all together. All the while the percentage of taxes paid by the rich have increased ever since Reagan's cuts.
Wanna argue about that - If you can read.
LOL! We're going in circles. My position is that they do not have the power they are said to have. Money may buy fair weather friends, but it won't keep the taxman away. In fact just the opposite. Because government has no money of its own, it must target the earnings and productivity of the rich.
See, the problem would be lessened if the tax burden percentages were more evenly distributed. A flat tax, say. The rich would still rightly pay more, but the burden would be shared, so no one would have a free ride or a motive to unfairly pressure the government to rob the rich. It would cost everyone the same.
I have been saying that for years, thanks.
Those that disproportionately use the services our taxes pay for, but which we seldom use, shouldn't have the same voting clout.
The elites (Rockefeller/Morgan/Carnegie) have used socialism against us, their wealth is secure in trusts and foundations free of taxation, and what they do spend goes to propaganda machines to perpetuate the deception.
These were the people who pushed for the ICC & the Fedl Reserve for their own protection, with average Americans holding the ever expanding tax bag their profits come from.
Like Kerry and the Kennedys
It's the very reason the Founders limited Govt as such, to protect we the people's rights, especially property rights, without which there is no real freedom, like now.
Famous quote from Rush.
"If you thought no taxation without representation was bad, you should see what it looks like with representation".
the old 80/20 rule applies.......
No, you haven't read the rewrite of history. They wanted to especially protect sexual rights. The more perverse the better.
I agree. If we're a nation of equals under the law, we should be a nation of equals under the taxman as well.
You do not accurately describe the impact of income taxes on pricing. Prices are not determined by figuring in income taxes. Income taxes are not a true cost of production since they are only paid IF a profit is made. This is a common misunderstanding of the Fair Taxers.
This article brainchild has zip to do with the fair tax.
It is solely about the left's claim of "Tax cuts for the rich" which is a blatant lie the leftists and MSM continue crowing.
They weren't disproportionately for the rich and are the very reason for our solid growth and low unemployment since the reals cuts of 2003.
Get a clue Idiot!
Harvard defends their sky-high tuition by claiming that it ensures the super-rich will attend, resulting in massive endowments from those parents and alumni - WHICH ENABLES THEM TO GIVE SCHOLARSHIPS TO UNDERPRIVILEGED MINORITIES...
Sure, it's nothing to do with retaining their 13 billion cash in the bank. They want to help the poor attend Harvard, so they make it unaffordable to the entire middle-class of America.
So there's also that side-benefit of keeping out good average Americans (and their good average values). Only the exploited poor and their wealthy exploiters end up at Harvard.
The tax codes are similarly structured: large revenues (from the very wealthy) ensure an influx of "public sector-ism" into the economy through subsequent govenment spending. Public sector-ism is the figurative noose around the neck of middle-class Americans - financially, morally, and politically. In short, it harms and kills conservatives.
The calls for the Fed Reserve did not originate with the rich elites but with the Populists and Progressives thirty years BEFORE the meeting at Jeckyl Island. It was not a conspiracy against the common man so stop spreading that crap.
Taxpayers benefit from the Fed since ALL its profits are turned over to the US Treasury. Plus it has an incentive to prevent inflation since doing so protects even the bankers. So even if it were a bankers plot it would not act against the value of the dollar.
Some "services" cannot be properly charged to individual users but benefit all. If my neighbor had to pay for the firemen to put out his house and he couldn't do so do you really believe my house should burn down as a result?
Have you ever taken an economics course?
Thanks for that! Few understand how the super-elites, not hard working self made millionaires, but the Rockefellers etc who have used the Govt as their defenders that usurps middle American.
The socialist ruse of the caste system they created.
That is one of the problems with the way the fed is set up, they have no incentives to make a profit. The Fed takes in trillions of dollars and usually shows a profit of maybe $20 Billion or so, which is pocket change for them. The federal reserve really has an unlimited expense account with no incentive to keep their spending in check.
I don't believe you can say that the fed takes in "trillions of dollars" it isn't anything close to that.
But if set up as a profit making institution the Leftists and conspiratorialists would have a field day attacking it.
This is another myth that is widespread. The Constitution greatly EXPANDED federal power; it only limited the power of states. That expansion rightly came about because the prior government was powerless and contemptible incapable of resisting the negative actions of the states. It had ceased to exist for all practical purposes.
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