Reply #10: I've seen this number game played on Fox News all the time. [View All]

[ChillbertKChesterton]

Of course the top 10% pay a higher percentage of the total tax revenue, because they have a disproportionately high share of the total income (and even higher proportion of the wealth).

Let's look at this with a simple example:


If you get 100 people, 1 of them with $999 and 99 of them with $1, the total revenue for everyone is $1098
If you tax the top 1% at a rate of 10%, you get $99.90, if you tax the bottom 99% at 50% (that is, tax HALF of their entire revenue), you get $49.5.

This is an incredibly skewed distribution with an incredibly regressive tax policy, but let's look at the analysis the same way you are pointing out:

The total tax revenue for the entire group is $149.40
of the total taxed revenue, the top 1% pays over 2/3 of all taxes, at 66.86%. This is with the top 1% paying a 10% tax rate.
of the total taxed revenue, the bottom 99% combined pays less than 1/3 of all taxes, at 33.13%. This is with the bottom 99% paying a 50% tax rate.


According to this analysis, that poor 1% is getting shafted because he pays a FAR higher portion of the taxes. This looks unfair, it looks EXTREMELY progressive, because 1% pays over 2/3 of all taxes while the bottom 99 combined pay only 1/3 of all taxes.

However, looking at the income levels and tax rates, it becomes clear that this is not the case. The top 1% gets 100 times the income that anyone else gets, and they pay only 1/5 of the tax rate that everyone else gets.

This is the problem with the "share of taxes" analysis.