Tuesday, December 4, 2012

Most Americans saw their total tax rates fall over the past 30 years. But the rich made out best

Chart showing change in tax rates by income 1980-2010 Total tax rates'federal income + payroll + corporate + state/local'have gone down for
everyone over the past 30 years, but the top earners have benefited most. Derek Thompson at The Atlantic has pointed us to The New York Times's series of charts on what's been happening with taxes in the United States over the past 30 years. It's pretty much what you probably suspected:
Taxes fell 5% for the poorest households. They fell about 7% for the typical household. And they fell 14% for the richest households. It is fair to say that between President Carter and President Obama, taxes have fallen by twice as much for the richest families as for the median family.
Payroll taxes have gone up for all, but not as much for the rich because of the earning cap Social Security, now at $110,100.

State and local taxes have risen and these have affected lower-income people the most. That's because state and local governments levy the same property and sales tax rates on everyone, which hits those with lower incomes hardest. (Renters pay property taxes through their rent.) Less affluent households pay a larger share of income in sales taxes than those that are more well-to-do.

Progressivity has been reduced considerably.

Households earning more than $350,000 paid 20 percent of the nation's taxes in 2010, 1.37 times their share of total income, while in 1980, those households paid taxes equaling 1.56 times their share of income. The change was larger before the recession, which reduced investment income, as in past recessions.
Republicans, including Rep. Paul Ryan, continue to argue that what the tax system needs now is a further lowering of income-tax rates, both corporate and individual, with the biggest benefits going to the folks who already have the fattest wallets. They naturally hate proposals like the so-called Buffett Rule that would set a minimum level for people with incomes of $1 million and above'Buffett recently said he'd like to see a minimal effective tax rate of 30 percent on anybody making $1 million and 35 percent on anybody making more than $10 million.

That, as I have argued, is a step in the right direction, but not enough.

No comments:

Post a Comment