Random Observations: Progressive Taxation

Progressive Taxation

Politics | July 16, 2007 | Tim

Incredibly, via the New York Times business editorial pages:

The C.B.O.’s most recent calculations of federal tax rates show a highly progressive system. (The numbers are based on 2004 data, but the tax code has not changed much since then.) The poorest fifth of the population, with average annual income of $15,400, pays only 4.5 percent of its income in federal taxes. The middle fifth, with income of $56,200, pays 13.9 percent. And the top fifth, with income of $207,200, pays 25.1 percent.

At the very top of the income distribution, the C.B.O. reports even higher tax rates. The richest 1 percent has average income of $1,259,700 and forks over 31.1 percent of its income to the federal government.

So would it be okay if we stopped claiming, now, that the poor and middle class pay most the taxes? (For extra credit we could also stop claiming -- equally falsely -- that Bush shifted the tax burden downward.)

Comments

Now *that's* interesting...

Is the average annual income listed there the median or the mean average?

Posted by: The Complete Geek on July 17, 2007 04:43 AM

The poor and middle class do pay the most - collectively that is. The wealthier americans, as individuals pay more than the middle class and poor.

It's just that the US is made up of mostly poor and middle class folks.

Posted by: Joecool18 on July 17, 2007 06:09 PM

This seems to be based on the notion that a person's income is an accurate representation of material goods they benefit from (which is also what Buffett argued).

However a person with a business phone used for work and private use but considered a business phone is getting one form of unreported income. Same as the CEOs who have the executive board meeting in Hawaii. Or those with cash in an offshore tax shelter (now illegal) How common is that type of thing? I really have no clue. Though I agree that the claims that "MS doesn't pay taxes" were bogus in that they only included a single year when a large number of MS employees cashed out on stock, and ignored other years when MS paid large sums, creating a false impression.

This does at least refute one type of the 'rich don't pay (enough) taxes' argument.

Posted by: Ryan W. on July 17, 2007 07:07 PM

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