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The wealthy's taxes

By CL follow CL   2013 Mar 27, 9:51am 1,284 views   6 comments   watch   nsfw   quote   share      


What percent of Federal expenditures are paid for by taxes on the wealthy? And has that percentage grown or shrunk in the decades since Reagan?

(If there is a shortfall, what do we do with it? Since it is financed, do we figure it will be paid by the wealthy at the same rate, or do we ignore it since we don't know how it will be paid yet?)

What I'm wondering is if, even as the wealthy's pie has grown, has their share of the burden grown proportionately, increased disproportionately or has it fallen?

Thanks

1   Meccos   ignore (1)   2013 Mar 27, 2:50pm     ↓ dislike (0)   quote   flag        

First define wealthy...

2   drew_eckhardt   ignore (0)   2013 Mar 27, 3:19pm     ↓ dislike (0)   quote   flag        

CL says

What I'm wondering is if, even as the wealthy's pie has grown, has their share of the burden grown proportionately, increased disproportionately or has it fallen?

It depends on how you define "wealthy."

Most people incorrectly define "wealth" in terms of income as opposed to assets.

Using that metric and defining the "wealthy" as the top earning decile, the Bush 43 cuts moved America from second to first highest in the OECD 24 ranked by ratio of income tax paid to income earned.

The OECD 24 also includes Australia, Austria, Belgium, Canada, The Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, The Netherlands, New Zealand, Norway, Poland, The Slovak Republic, Sweden, Switzerland, and The United Kingdom.

The CBO has been tracking average tax rates since 1979; and the top one percent with incomes averaging 1.4 million will be paying an average of 35.5 percent which is among the highest since they started tracking.

3   Bellingham Bill   ignore (5)   2013 Mar 27, 4:23pm     ↓ dislike (0)   quote   flag        

What percent of Federal expenditures are paid for by taxes on the wealthy?

I define wealthy as Top 5% since it's very rare for someone with their own labor alone getting into this region, and if you're making this money ($160,000/yr AGI) you're leveraging economic rents of some kind (doctor, lawyer, real estate agent, etc), or have some talent that is rare in the population (pro ball player), or have people working for you (small business capital) that you're profiting from.

This is a good summary of the situation:

http://taxfoundation.org/article/summary-latest-federal-income-tax-data-2012

shows the top 5% paid $560B in 2010, or 1/6th the Federal outlays ($3.5T)

And has that percentage grown or shrunk in the decades since Reagan?

The above page has the income breakouts for 1980, in 1980 the top 5% cleared $342B, or 1/5th the total income (for 2010 they cleared 1/3 the national income).

They paid $92B in taxes, for a 27% federal income tax burden (2010 their burden was 20.7%)

Total outlays for 1980 was $600B, so the top 5% paid 1/6 the gov't cost in 1980, same as 2010.

4   Bellingham Bill   ignore (5)   2013 Mar 27, 4:31pm     ↓ dislike (0)   quote   flag        

drew_eckhardt says

Most people incorrectly define "wealth" in terms of income as opposed to assets.

hmm. Assets that don't produce income . . . . not sure what you're talking about here.

the Bush 43 cuts moved America from second to first highest in the OECD 24 ranked by ratio of income tax paid to income earned.

This is lying with statistics, by lumping in all of the top 10% households as wealthy.

Comparing top 5% and top 1% is much more instructive, given the income distribution of this country.

The top 5% -- one out of twenty -- clear 1/3 the national income, and the top 1% clear 1/5th.

This is obscene, and unsustainable.

And it doesn't even get into the current situation with corporate profits.

http://research.stlouisfed.org/fred2/series/CP

5   CL   ignore (0)   2013 Mar 28, 2:48am     ↓ dislike (0)   quote   flag        

Bellingham Bill says

Total outlays for 1980 was $600B, so the top 5% paid 1/6 the gov't cost in 1980, same as 2010.

Thanks BB. Exactly what I was wondering.


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