How the rich soaked the rest of us. The last few decades: a massive redistribution of the tax burden

[TalkingDog]

http://www.guardian.co.uk/commentisfree/cifamerica/2011/mar/01/us-taxation-public-finance?INTCMP=SRCH

Over the last half century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else. The three convenient and accurate Wikipedia graphs below show the details. The first graph compares the official tax rates paid by the top and bottom income earners. Note especially that from the end of the second world war into the early 1960s, the highest income earners paid a tax rate over 90% for many years. Today, the top earners pay a rate of only 35%. Note also how the gap between the rates paid by the richest and the poorest has narrowed. If we take into account the many loopholes the rich can and do use far more than the poor, the gap narrows even more.

One conclusion is clear and obvious: the richest Americans have dramatically lowered their income tax burden since 1945, both absolutely and relative to the tax burdens of the middle income groups and the poor.

[MannyGoldstein]

1. Bullshit!

According to the IRS, the wealthiest Americans pay an average of 17%, not 35%, because they pay mostly on "capital gains" which are taxed at 15%.

It's way worse than the Guardian says.

[TalkingDog]

2. And quoting Wikipedia? The Wiki author got the info somewhere...

original sources?

[Igel]

3. Thus you point out the huge flaw in the argument.

They argue tax rates. Since the rates are lower, the tax burden's been redistributed. Rates are theory.

They even mess that up: The highest rate isn't on all income, just on a percentage of income. The actual tax rate--still theory--is a weighted average of the different tax rates on different "slices" of a person's income.

You talk about tax actually paid. You have a single datum, but are on the right path.

To have an intelligent discussion, you have to know not tax *rates* but how much in taxes each decile actually *paid*.

Nobody wants to talk about the amount of taxes paid. It's much less satisfying. Easier to talk about theory--it takes less work, it's clearer since there's no fuzzy nuances and facts on the ground to get in the way. In fact, the theory makes the point very nicely that facts on the ground don't make and never made.

[Hannah Bell]

4. what?

[snot]

5. Hey, to anyone that actually understands taxes and economic stuff,

I think we could really use a calculation showing exactly what all the tax cuts have cost us, starting with, say, Reagan.

Like, how much did the top 5 or one percent or so save, vs. the rest of us?

With break-downs for inflation-adjustment, discounting to present value, lost investment opportunity costs, etc. to the extent appropriate.

We really can't have an informed discussion without this; and I suspect that WITH this, the discussion would soon be over.

[Hannah Bell]

7. i think you're right.

[ashling]

6. Also a massive redistribution of wealth

the right screams bloody murder about things likw Medicar and Medicade as a redistribution of wealth, but the real redistribution is in the higher interest rates a la Greenspan for the money that you and I have to borrow to keep going. Who do you think ends up getting all of that interest. It turns up as non-taxable (or minimal) capital gains for the super rich. (The Predator State, by James Kenneth Gailbraith