Tax Burden of Top 1% Now Exceeds That of Bottom 95%

[red states rule]

So, the top 1% earns 25% of the income, but pays nearly half the taxes (more than 95% of the population combined). Since Obama and Congress wants to increase the taxes on the highest earners, what do they think is a fair percentage?

July 29, 2009

Tax Burden of Top 1% Now Exceeds That of Bottom 95%

by Scott A. Hodge


Newly released data from the IRS clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes.

Indeed, the IRS data shows that in 2007—the most recent data available—the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1 percent paid 24.8 percent of the income tax burden in 1987, the year following the 1986 tax reform act.

Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.

To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.

Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.—not France or Sweden—has the most progressive income tax system among OECD nations. We rely more heavily on the top 10 percent of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation.

We are definitely overdue for some honesty in the debate over the progressivity of the nation's tax burden before lawmakers enact any new taxes to pay for expanded health care.


http://www.taxfoundation.org/UserFiles/Image/Blog/blog20090729-chart1.jpg


http://www.taxfoundation.org/blog/show/24944.html

[Noir]

Interesting that the only real drop in the graph is around 2000-2001. During the rest it's on a pretty steady increase, meaning that a succession of both the liberal and conservitive presidents have been taxing the rich more and more.

[red states rule]

Interesting that the only real drop in the graph is around 2000-2001. During the rest it's on a pretty steady increase, meaning that a succession of both the liberal and conservitive presidents have been taxing the rich more and more.

The Bush tax cuts took place around 2002 - and damn - the "rich" paid more in taxes after their taxes were CUT

Why do liberals always set out to punish achievement and want more and more from the producers?

[Noir]

The Bush tax cuts took place around 2002 - and damn - the "rich" paid more in taxes after their taxes were CUT

Why do liberals always set out to punish achievement and want more and more from the producers?


Are you saying that since 1987 there have only been liberal presidents?

[red states rule]

Are you saying that since 1987 there have only been liberal presidents?

No, I am saying there is a breaking point for even the most patriotic Americans. When your government takes away all chance of personal success - they will have no choice but to set up shop somewhere else.

Dems want to raise taxes on the "rich" to such a high level, folks in blue states like CA and NY will be paying close to 60% of their income to the government

Many of those folks will be small business owners. Contractors, owners of the gas station with the Mini Mart, plumbers, lawn care business owners, and other "evil and greedy" rich people

[Noir]

No

Exactly. So both liberals and conservitives are to blame. It's the easy option to tax the richer. Not saying it's the right option, but it's the easier option.

[red states rule]

Exactly. So both liberals and conservitives are to blame. It's the easy option to tax the richer. Not saying it's the right option, but it's the easier option.

Please do not ignore the rest of the post Noir - I understand it is hard for any liberal to try and debate the facts

But please try

I am saying there is a breaking point for even the most patriotic Americans. When your government takes away all chance of personal success - they will have no choice but to set up shop somewhere else.

Dems want to raise taxes on the "rich" to such a high level, folks in blue states like CA and NY will be paying close to 60% of their income to the government

Many of those folks will be small business owners. Contractors, owners of the gas station with the Mini Mart, plumbers, lawn care business owners, and other "evil and greedy" rich people

[Noir]

Please do not ignore the rest of the post Noir - I understand it is hard for any liberal to try and debate the facts

But please try

I am saying there is a breaking point for even the most patriotic Americans. When your government takes away all chance of personal success - they will have no choice but to set up shop somewhere else.

Dems want to raise taxes on the "rich" to such a high level, folks in blue states like CA and NY will be paying close to 60% of their income to the government

Many of those folks will be small business owners. Contractors, owners of the gas station with the Mini Mart, plumbers, lawn care business owners, and other "evil and greedy" rich people


I only used the part of the post that I asked for, to make my point.
Like I said I dunno how right or wrong it is, cus I can see both sides and dunno yet were I think the line should be drawn. Tis the problem with economics, often both sides are very convincing.

[red states rule]

I only used the part of the post that I asked for, to make my point.
Like I said I dunno how right or wrong it is, cus I can see both sides and dunno yet were I think the line should be drawn. Tis the problem with economics, often both sides are very convincing.

It is NOT a problem if the Dems would STOP spending money they do not have

Perhaps that is to radical a concept for liberals to grasp - but it would solve the problem

Libs know they do not have it. Tax revenues have dropped (thanks to Democrtas econmic policies) to levels not seen since the 1930's

[Kathianne]

It is NOT a problem if the Dems would STOP spending money they do not have

Perhaps that is to radical a concept for liberals to grasp - but it would solve the problem

Libs know they do not have it. Tax revenues have dropped (thanks to Democrtas econmic policies) to levels not seen since the 1930's

I agree. This administration is spending money for years, even decades into the future. They set out to milk a crisis, that may have peaked a month or more ago. They know it and are now trying to figure how to keep spending, while claiming to be responsible.

TARP under Bush was heavily questioned, but terror went along with it. A collapse of financials? Seemed too risky so most went along with. His legacy will show the problems there, especially in choices made in 'whom to save and whom to sink.' That he asked Obama for another dip in the pot, hoping Obama would pay the price was a miscalculation on his part, but yeah, the record is there that he and Obama were working together.

The auto bailout: Obama
The class warfare: Obama
The using scare tactics: Obama
The breaking of 'no taxes on those under $250k': Obama

[avatar4321]

Interesting that the only real drop in the graph is around 2000-2001. During the rest it's on a pretty steady increase, meaning that a succession of both the liberal and conservitive presidents have been taxing the rich more and more.

The chart started in 1987. President Bush has been the only conservative President elected since then.

[Noir]

The chart started in 1987. President Bush has been the only conservative President elected since then.

The have been 3 conservative presidents in that time. R. Regan left office in 1989. George H.W. Bush was in office from 1989-1993 and George W. Bush was the president from 2001-2009. That means during the 22 years in the graph a conservitive was the president for 15 of them.

[red states rule]

The have been 3 conservative presidents in that time. R. Regan left office in 1989. George H.W. Bush was in office from 1989-1993 and George W. Bush was the president from 2001-2009. That means during the 22 years in the graph a conservitive was the president for 15 of them.

Noir, this may come as a shock to you - but the US does not have a tax problem, the US has a spending problem

There is no need to raise taxes on anyone or on any business

[glockmail]

Are you saying that since 1987 there have only been liberal presidents? On this issue, yes.

[Noir]

Noir, this may come as a shock to you - but the US does not have a tax problem, the US has a spending problem

I didn't say it had a tax problem, you did.


Libs know they do not have it. Tax revenues have dropped (thanks to Democrtas econmic policies) to levels not seen since the 1930's


There is no need to raise taxes on anyone or on any business

I didn't say they should be raised. I was merely pointing out that a succession of liberal and conservitive presidents have all riased taxes on the richest. Fact.

[red states rule]

I didn't say it had a tax problem, you did.





I didn't say they should be raised. I was merely pointing out that a succession of liberal and conservitive presidents have all riased taxes on the richest. Fact.

Noir, a basic economics lesson for you - no charge BTW

The fact remains that if it weren't for the courageous entrepreneurs - who were willing to risk their investments and put in a real honest day's work (and more) to build up their companies - you wouldn't have the standard of living you have today in America. You wouldn't have the jobs you have today in America.

Government didn't create that - people did.

If you take away any incentive for American entrepreneurs to work hard and take risks - then you will see your country stagnate.

Liberals have taken trillions out of the private sector to fund their pet projects - and the economy is tanking. China is ready to cut off the credit line. More and more people are losing their jobs. Tax revenues are down to Depression lows

What do libs want to do - what they always want to do. Raise taxes

[red states rule]

Lets see what is happening in liberal blue states where the Dems raise taxes on the rich



Soak the Rich, Lose the Rich
Americans know how to use the moving van to escape high taxes.

By ARTHUR LAFFER and STEPHEN MOORE
With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.

Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."

Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.

Martin Feldstein, Harvard economist and former president of the National Bureau of Economic Research, co-authored a famous study in 1998 called "Can State Taxes Redistribute Income?" This should be required reading for today's state legislators. It concludes: "Since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions, a relatively unfavorable tax will cause gross wages to adjust. . . . A more progressive tax thus induces firms to hire fewer high skilled employees and to hire more low skilled employees."

http://online.wsj.com/article/SB124260067214828295.html

[avatar4321]

The have been 3 conservative presidents in that time. R. Regan left office in 1989. George H.W. Bush was in office from 1989-1993 and George W. Bush was the president from 2001-2009. That means during the 22 years in the graph a conservitive was the president for 15 of them.

First, your being absolutely ridiculous if you expect me or any other rational person to accept that Ronald Reagan was elected after 1987 when he had less than a year in office yet and when everyone knows his tax cuts were on the early end of His Presidency.

Second, your being just as ridiculous if you are trying to claim that President Bush 41 was conservative by anyone, including his own, standards. The man was a moderate Republican and raised taxes on the population. Which is why he was a one term President.

So like I said before the only even somewhat conservative elected since 1987 was George W Bush. So why should we expect non conservatives to indicate what conservatives in office would do when the only conservative we have on record actually did reverse the trend?

[red states rule]

What if our dinner bill was paid for the way taxes are paid?


Tax Cuts Made Simple

This is a VERY simple way to understand the tax laws. Suppose that every day, ten men go out for dinner. 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 $7; the eighth $12; The ninth $18. The tenth man -- the richest -- would pay $59. That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement -- until one day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20. "So dinner for the ten only cost $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 eat for free. But what about the other six -- the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?" The six men 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 end up being *paid* to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth Man with a of $52 instead of his earlier $59.

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth. "But he got $7!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got seven times more than me!" "That's true!" shouted the seventh man. "Why should he get $7 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. The system exploits the poor!" The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They're $52 short!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

http://www.crushingchris.com/library/ten_men.htm

[Insein]

Are you saying that since 1987 there have only been liberal presidents?

Yes that seems an accurate statement to the extent that even though W lowered taxes, he spent like a drunken sailor. Bush senior raised taxes and increased government programs. Clinton's record speaks for itself. While he was forced to reign in the spending during the republican congress years, he furthered the spending as much as he could when he had the favorable congress.

So yes, we haven't had a conservative president since 1987.

[red states rule]

Why would Dems want to raise taxes as the economy is shrinking?

Perhaps they think raising taxes will spur ecomic growth - meanwhile the spending continues and tax revenue to the government declines


snip

Federal tax revenues plummeting

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.

..... For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.

..... "The numbers for 2009 are striking, head-snapping. But what really matters is what happens next," said (the Tax Policy Center's William) Gale, who previously taught economics at UCLA and was an adviser to President George H. W. Bush's Council of Economic Advisers.

"If it's just one year, then it's a remarkable thing, but it's totally manageable. If the economy doesn't recover soon, it doesn't matter what your social, economic and political agenda is. There's not going to be any revenue to pay for it."

A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs.

http://i739.photobucket.com/albums/xx40/mmatters/USjulyAndYTDrecs09v08.jpg


http://newsbusters.org/blogs/tom-blumer/2009/08/04/ap-finally-discovers-head-snapping-u-s-receipts-dive-still-understates-e