Skip to comments.CBO: The wealthly pay 70 percent of taxes
Posted on 07/11/2012 3:33:01 AM PDT by markomalley
Wealthy Americans earn about 50 percent of all income but pay nearly 70 percent of the federal tax burden, according to the latest analysis Tuesday by the Congressional Budget Office though the agency said the very richest have seen their share of taxes fall the last few years.
CBO looked at 2007 through 2009 and found the bottom 20 percent of American earners paid just three-tenths of a percent of the total tax burden, while the richest 20 percent paid 67.9 percent of taxes.
The top 1 percent, who President Obama has made a target during the presidential campaign, earns 13.4 percent of all pre-tax income, but paid 22.3 percent of taxes in 2009, CBO said. But that share was down 4.4 percentage points from 2007, CBO said in a finding likely to bolster Mr. Obamas calls for them to pay more by letting the Bush-era tax cuts expire.
The big losers over the last few years were the rest of the well-off, especially those in the top fifth, who saw their tax burdens go up.
(Excerpt) Read more at washingtontimes.com ...
About those parasites. You can’t send them to prison. You can’t even outvote them. You probably don’t want to refuse to pay your taxes or quit making income, which would really cut your taxes down.
So just have another beer!
Unfortunately Rush is correct that class warfare is not the fight we can win. We already know that the top is overtaxed along with every other producer in this country.
We’ve simply got to find a new way to teach the taxation and spending issue that doesn’t sound like we’re trying to make the wealthiest among us look like victims.
I don’t think that even pointing out the disastrous consequences of leftist policies will work.
That’s not what a sheeperal is most interested in.
This explains the response I got from my lib-in-law. I pointed out the inevitability of an economic crash - “then we’ll all be in the same boat”. Like that was a consolation, indeed, even a “good” thing. I think the root of that was “then the rich will not have anything either”.
Work hard, do your best, protect your assets as well as you can...and fight the liberal bastards until your dieing breath (whenb you leave whatever remains of your assets to the most conservative cause that you find interesting.
Work hard, do your best, protect your assets as well as you can...and fight the liberal bastards until your dieing breath (when you leave whatever remains of your assets to the most conservative cause that you find interesting.
That’s why I wish we could eliminate all the taxes down the line and dump them on the consumer as a clearly marked sales tax. Even people on welfare could understand why other people’s money doesn’t buy as much as it used to.
I doubt that we’ll ever get a NRST because politicians live on hidden detriments and visible benefits. They would be powerless if the situation was to change to visible detriments along with visible benefits.
My daughter (28) was complaining yesterday about having to pay her car tax every year in NC. We started talking about how there are so many more taxes than income tax and how that is never brought up when discussing taxes. I would love to know the total taxes on everything we pay per year. I’m sure it would be depressing.
If we remove the taxes and regulations from corporations, they won’t have any incentive to buy politicians and then we’d have a bunch of politicians living on the 6 figure pittance we pay them. LOL
When ‘Progressives’ screamed about the lowering of rates, they NEVER do the math with all the other taxes that State and local officials dream up.
Here in Ohio, we have a CAT (Commercial Activity Tax) for businesses. We are currently preparing our 2290 (FHUT- Federal Highway Use Tax) @ $550 per truck. And we used to manufacture specialty agricultural trailers and pay a 12% Federal Excise Tax on the TOTAL purchase price(even on the initial profit which is also subject to income taxes).
The total Revenue of ALL (Federal, State, and Local) governments was 38% of GDP in 2007. I guarantee that it will NEVER get that high again. People are consciously altering their behavior to avoid (not evade)all tax burdens.
The simple solution is to get rid of withholding and force people to write a check every April 15th, instead of making them feel like they cheated the government when they get a tax refund. Of course they’re too stupid to realize that a tax refund is nothing more than an interest-free loan they gave to the government.
Being self-employed, you probably feel like you are paying double the social insurance taxes, but the CBO considers all social insurance taxes to be paid by the employee -- in other words, the "employer's share" is really just another payroll cost.
No, it doesn't include state and local taxes. But, the CBO compiles this information to document the effects of federal tax policy. If you want to know about state taxes, you should be looking to the state(s) to compile that information.
However, if you look at the actual numbers, I think you would be hard pressed to claim that you actually pay a higher average federal tax rate than the top 1%'s. There's a pretty sharp contrast between the overall average and the top 1% (and the top 5%, too).
As a whole, the group still gets a significant portion of their income from ordinary sources that are taxed at the highest marginal rate. Yes, there are undoubtedly some high income tax payers that pay only the minimum dividend and capital gains taxes, but that income has already been taxed as corporate profits (and their share of corporate income taxes reflects that).
Here are lots of graphs from the last set of data, ending in 2007:
Until now, that was the last data that the CBO has published. The IRS has published data up to 2009, but for federal individual income tax only:
I've written an extensive posting about this data here:
It will take a while before I can build similar graphs from this new data.
A quick look at the tax rates turned up something really interesting.
The burden of taxes have been shifting more and more onto the "rich" over the past 30 years. In the past 2 years, the average tax rates for the bottom 80% of taxpayers has dropped significantly. Despite that, their SHARE of federal taxes has gone up.
In contrast, the tax rates for the top 20% have (proportionally) dropped much less, or even held steady. But, since their income has been significantly reduced, the tax revenue from that segment has been reduced as well -- and their share of federal taxes has shrunk.
This is yet another folly of depending on significant tax revenue from the "rich": their income rises and falls with the economy, much more so than everyone else. So, when times are bad, the impact on tax revenue is magnified by the dependency on the "rich".
It will look almost exactly the same as the previous set. I'm planning to replicate these graphs:
There is some additional data in this set from which I want to make some graphs, but I haven't figured out exactly how to portray them. It shows how the different types of income are distributed: wages/salaries, capital gains, etc. In a quick glance, I found some surprises (at least to me).
It might be interesting to compare the old data with the new as well.
There's no need to compare the two sets -- both stretch back to 1979. You can see exactly how things have changed in the past three decades. I think that's the most important part of the data -- our tax burden is actually being shifted onto the "rich".
Aside from the fairness issue, it's turned out to be a bad policy: the "rich" have a variable income that is much more sensitive to the economic cycle. In this most recent downturn, it significantly increased the deficit. If the income tax was more broadly based, the revenue downturn wouldn't have been as bad.
However, even the earlier years aren't going to be exactly the same, as the CBO adjusts everything into constant dollars, as of the last year. So, the previous set of data will be in 2007 dollars, while the new set of data will be in 2009 dollars.
I didn't notice this before, and I think it's worth a separate response. I've explained it in other postings, but I want to make it clear:
The reason that the top 1%'s share of federal taxes have gone down since 2007 is because their share of income has gone down. Here are the numbers:
Share of federal taxes: 2007-26.7%, 2009-22.3%. That's an absolute reduction of 4.4%. But the relative change is actually (26.7-22.3)/26.7, or 16.5%.
Share of before-tax income: 2007-18.7%, 2009-13.4%. That's an absolute reduction of 5.3%. But, the relative change is (18.6-13.4)/13.4, or 28.3%.
Do you see what happened? The top 1%'s share of federal taxes went down because their share of before-tax income went down even more. So, if you hear anyone claim that the rich paid less taxes in 2009 than 2007, you must push back right away with the factual counterpoint that it was because their income went down even more.
As I've noted in my previous posting, this is one of the bad aspects of relying on the "rich" to foot most of our income tax bill. Their income is much more sensitive to the economic cycle. As a result, recessions now have a disproportionate impact on federal tax revenues.
Maybe someday someone will figure out the total of all taxes and not just Federal Income.
I wouldn't bet on that.
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