The successful pay plenty of taxes

For many years, the Tax Foundation has published figures on shares of federal income taxes paid by percentiles of income. They always showed those at the top of the income distribution paying an overwhelming share of all taxes. This was powerful refutation of the traditional liberal argument that the rich don't pay their fair share. These data went mostly unnoticed until 1978, when Paul Craig Roberts, then working for Sen. Orrin Hatch, R-Utah, published an article about them in the March issue of Harper's Magazine. Back then, Harper's was a highly respected publication -- it has since gone downhill -- and his article got a lot of attention.

Roberts showed that the top 1 percent of taxpayers -- those earning more than $59,338 in 1975 -- paid 18.7 percent of all federal income taxes, up from 17.7 percent 5 years earlier. A similar increase was shown by the top 5 percent, top 10 percent and top 25 percent of taxpayers. The top half of taxpayers paid 92.9 percent of all income taxes in 1975, meaning that the bottom 50 percent paid just 7.1 percent.

Interestingly, the reaction of liberals to the Roberts article was to deny it. They simply refused to believe that the data were correct. House Majority Leader Jim Wright, D-Tex., was especially incredulous. He demanded that the Congressional Research Service give him the correct data.

The CRS response was written by Donald Kiefer, now head of the Treasury's Office of Tax Analysis. Although quibbling with some of Roberts' interpretations, he confirmed that the data were accurate. He had little choice because the original figures came straight from the Internal Revenue Service's statistics of income report.

In the years since, the annual publication of the IRS's tax shares data has been eagerly awaited by those opposed to class envy. The most recent figures became available on Jan. 10 and were released by the Joint Economic Committee of Congress. Amazingly, they show that the share of total federal income taxes paid by the top 1 percent of taxpayers has doubled since 1975. In 1999, they paid 36.2 percent versus 18.7 percent in 1975, the latest available when Roberts wrote his article.

Other upper-income groups have also seen a sharp increases in their share of the tax burden. Between 1975 and 1999, the top 5 percent of taxpayers went from 36.6 percent to 55.5 percent of taxes, the top 10 percent went from 48.7 percent to 66.5 percent, the top 25 percent went from 72 percent to 83.5 percent, and the top half of taxpayers went from 92.9 percent to 96 percent. The bottom 50 percent of taxpayers now pay just 4 percent of federal incomes taxes.

To put these numbers into perspective, it should be noted that the top 1 percent of taxpayers reported just 19.5 percent of adjusted gross income. Thus, their share of the tax burden exceeded their income share by almost 17 percentage points. For the top 5 percent, the spread was even greater -- more than 21 percentage points. By contrast, for those in the bottom 50 percent, the difference between the percentage of total taxes and total income was minus 9.25 percent. That is, their income share greatly exceeded their tax share.

On a chart, these data form a kind of "yield curve." For economists, the yield curve measures the spread between short-term interest rates, which are normally low, and long-term rates, which are normally higher. The slope of this curve is an important indicator of monetary policy and future economic conditions. A tax yield curve would show how steeply progressive federal income taxes are.

Those in the top 1 percent of the income distribution paid a 27.5 percent effective income tax rate in 1999. Polls show that this exceeds the highest percentage of taxation that most Americans believe anyone should pay, no matter how large their income. The latest, a Fox News/Opinion Dynamics poll taken in March 2001, found that a majority of Americans think 20 percent is the most anyone should pay.

However, polls also show most people greatly underestimate how much the rich actually pay. That is why liberals usually get a receptive audience when they say that the rich aren't paying their fair share and should be denied the benefits of any tax cuts. One study found that most people think that the rich don't pay more than 20 percent now.

For these reasons, greater knowledge about how much the wealthy actually pay in taxes is a powerful antidote to class warfare. Most Americans are fair-minded and don't envy those with incomes higher than they have. But if they are misled about the facts, they can make mistakes and vote for demagogues who hate the rich simply because they are rich.

Did you all get that?

In 1999, the top 1% of income earners paid 36.2 percent of the individual income taxes collected in this country, and the top 5 percent paid 55.5 percent. In contrast, during the same year, the bottom 50% paid just 4% of the taxes.

This is more information that refutes the oft-repeated canard that the rich don't pay their "fair share." The evidence here proves that, in fact, the rich pay much more than their "fair share." Indeed, it would appear that the "poor" are the ones who are not pulling their weight; the bottom 50% of income earners paid just 4% of total income taxes.

And the share of taxes paid by the wealthy has increased in the last 25 years, and the share paid by those in lower income brackets has actually decreased. In effect, we have moved toward a system of punishing those who work to improve their financial status, while effectively rewarding those who don't work, invest, and save.

We need tax reform in this country if we want a strong economy. You can't punish people for producing and then expect them to produce more.

Yes indeed!

Go here to read ALL about the what is taking place as a result!

We MUST, if this great R E P U B L I C is to survive, SOON consign this communist inspired income tax system to the ASH HEAP of history where it so properly belongs!

while no one would disagree that our current tax system is progressive, these numbers exaggerate reality by comparing tax burdens in terms of dollars instead of in terms of percentage of income.

as a percentage of their income, the rich still pay more in FIT, but not dramatically more than the middle income brackets, especially after bush collapsed the topmost bracket (the poorest brackets do indeed get a free ride, God bless them).

BTW, democrats used this same slight of hand (refering to dollars instead of percentage of income) to exaggerate the extent to which bush's tax cut favored the rich.

these numbers are also misleading because they only look at FIT. when medicare, soc. security, state, local, and sales taxes are factored in, the difference in percentage of income paid in taxes is further narrowed.

Every argument I see from the left is some sort of scheme to take money from one pocket and put it in another.

Really, it's all about BUYING VOTES with other people's money. (OPM) With OPM, the Demorats can spend money on social(ist) programs for the "underprivileged" , and thus ensure that the beneficiaries of this largesse will continue to vote for Demorats. High taxes are the Dems way of maintaining their power. Without high taxes, the whole system crumbles. "Fairness" has nothing to do with this system. It's only about getting as much money as they can to solidify their power.

Yep, quite so! And a bit further down on the thread I notice one of the liberal Democrat disruptor wannabees trying to make believe that if a corporation does not pay taxes it must be doing something not allowed by the income tax laws. That, of course, does not necessarily follow at all, but the guy thinks it's too good a "hit" to miss out on. A notion worthy of Tom Daschle.

The tax laws are so complex that a large number of well-paid tax professionals can find all sorts of loopholes - which is almost certainly what they did for Enron's taxes. If it's allowed under the tax code, it ain't illegal. That's the bad thing about having such a complex set of laws and the bad thing about "taxing businesses" at all. If they had sent any taxes on to the government, guess who would actually furnish the money?

Yep, we would.

Little Willie was "The Worst President In American History".

Adam Smith, the father of modern economic thought, had a lot to say about taxation in his still great book Wealth of Nations pp. 561-64. Here is what he had to say about bad taxes:

1. A tax was bad that required a large bureaucracy for administration.

2. A tax was bad that "may obstruct the industry of the people, and discouraged them from applying to certain branches which might give maintenance and employment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so."

3. A tax was bad that encouraged evasion. "The law, contrary all the ordinary principals of justice, first creates the temptation, and then punishes those who yield to it. "Evasion is also bad, says Smith, because it tends to "put an end to the benefits which the community might have received from the employment of their capitals."

4. A tax is bad that put the people through "odious examinations of the tax-gatherers, and exposes them to much unnecessary trouble, vexation, and oppression...It is in one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign"

I ask you, which of these are NOT true of our current tax system?

Thanks for the ping, Bigun!

“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.”
[Thomas Jefferson, letter to Benjamin Rush, 1800.]

You can also click here to find out how to help us replace the income tax with a National Retail Sales Tax and abolish the IRS!

We will never be a truly FRee people so long as we have the income tax and the IRS.

If you consider those who earn between 26k and 52k the rich then I agree with you. The problem is that you have oversimplified the matter. It is not just rich or poor. Its rich, middle class, and poor. And the middle class are really struggling. The rich and the middle class have payed more taxes in the last 10 years. But the middle class bring in much more tax dollars than the wealthy do. They pay for about 96% of all taxes. Someone earning over $293,415 pays 36.2% of all taxes. Most Americans are raising children, working hard, trying to save and send their children to college. The Federal Government makes it very difficult for them by taking 28% of their income. Due to inflation, this struggling class has a greater tax burden. This is outrageous.

This information is from the Tax Foundation.
Top 50%
Number of Returns (000)
63,005
AGI ($000,000)
5,126,164
Income Taxes Paid ($000,000)
842,168
Group's Share of Total AGI
86.3%
Group's Share of Total Taxes
96.0%
Income Split Point
above $26,415

Class warfare as we know will end when the Federal government cuts the high taxes on the middle classes and they are able to save more money and become affluent.

Your desire to end class warfare is to be applauded since it, along with the archaic income tax laws, gives the government the ability to manipulate taxpayers as desired by politicians and to hide many of the taxes that taxpayers actually bear.

A system that would eliminate the problems you observe is a National Retail Sales Tax (NRST) such as the FairTax which would have a known tax rate that all would pay, would put more money in wage-earners' pockets, would lower prices, and would lower government spending for a given amount of things. In addition, the overall tax burden of the individual taxpayer would decrease and the taxpayer would have control of when and if taxes are paid since he would control his own consumption.

It would offer many economic benefits to the country as a whole as well. The FairTax bill (HR2525) is well worth reading and is also similar to the other NRST bill.

The bill may be obtained here (enter "hr2525" in "Bill Number" and in the resulting window click on "Full Display"), and to see the websites, click here, and here here, and here.

Little Willie was "The Worst President In American History".

The poster you're admonishing is a liberal Democrat disruptor wannabee who is well-known on these threads. Almost anything he posts is a lie. I'd suggest you just ignore him since all he wants is attention.

Little Willie was "The Worst President In American History".

Democrats are Socialists and Republicans are Capitalists.

May be true of the rank and file Republicans in the trenches, but it is most certainly not true of the majority of Republicans in the House and Senate. Republicans have never consistently made the case that this writer has in the article. Every time Democrats start accusing the Republicans of favoring tax cuts for the rich, the Republicowards turn tail and run.

Now we are to the point that the Republicans idea of a tax cut is to promise a tax cut over ten years, so they don't have to take all the heat for an immediate tax cut now.

The GOP of today is not Ronald Reagan's party. They are a bunch of spineless sycophants, and the sooner the grassroots Republicans recognize it and hold their feet to the fire or throw the bums out, the better.

"NEW! Deal, Tax and Spend GOP" is the new motto of the Republican party.

I'll check that out, pigdog. It turns out that I read the chart wrong. Henrietta was right. I was wrong. Before, I had added up the entire Top 50%...I thought someone earning inbetween 26k and 52k payed for 96% of government. In reality that group pays for 13% of our government's revenues. Heres a quick look....

This is the information from taxfoundation.org. From 1999 figures.....

People with incomes over $293,415 pay 36% of the taxes, $317 billion

People with incomes $120,846 to $293,415 pay 19% of the taxes, $169 billion

People with incomes $87,682 to $120,846 pay 11% of the taxes, $97 billion.

People with incomes $26,415 to $87,682 pay 30% of the taxes, $259 billion

People with incomes below $26,415 pay 4% of the taxes, $35 billion

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