• curiouscat.com
  • About
  • Books
  • Glossary

    Categories

    • All
    • carnival (41)
    • chart (8)
    • Cool (35)
    • Credit Cards (45)
    • economic data (62)
    • Economics (439)
    • economy (126)
    • Financial Literacy (292)
    • Investing (324)
    • Personal finance (356)
    • Popular (43)
    • quote (194)
    • Real Estate (120)
    • Retirement (65)
    • Saving (90)
    • Stocks (158)
    • Taxes (51)
    • Tips (129)
    • Travel (7)

    Tags

    Asia banking bonds capitalism chart China commentary consumer debt Credit Cards credit crisis curiouscat debt economic data Economics economy employment energy entrepreneur Europe Financial Literacy government health care housing India interest rates Investing Japan John Hunter manufacturing markets micro-finance mortgage Personal finance Popular quote Real Estate regulation Retirement save money Saving spending money Stocks Taxes Tips USA

    Recently Posts

    • New Health Care Insurance Subsidies in the USA
    • Individual Stock Portfolio Investment Planning
    • Finding Great Investments Keeps Getting Harder
    • Huge Growth in USA Corporate Debt from 2005 to 2020
    • Retirement Portfolio Allocation for 2020
    • Tencent Gaming
    • Tucows: Building 3 Businesses With Strong Positive Cash Flow
    • The 20 Most Valuable Companies in the World – Jan 2019
    • 20 Most Popular Posts on the Curious Cat Investing and Economics Blog in 2018
    • An Inverted Yield Curve Predicts Recessions in the USA
  • Blogroll

    • Curious Cat Management Improvement Blog
    • Freakonomics
    • I Will Teach You to be Rich
    • Jubak Picks
  • Links

    • Articles on Investing
    • fool.com
    • Investing Books
    • Investment Dictionary
    • Leading Investors
    • Marketplace
    • Trickle Up
  • Subscribe

    • RSS Feed

    Curious Cat Kivans

    • Making a Difference

Investing and Economics Blog

Taxes – Slightly or Steeply Progressive?

The Wall Street Journal wrote “Their Fair Share” in July of 2008 claiming that the rich are paying their fair share of taxes.

The nearby chart shows that the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he’s going to cut taxes for those at the bottom, but that’s also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half.

Wow. The Wall Street Journal against a tax cut? Well I guess if it is a tax on the poor they don’t support cutting those taxes. I think it may well make sense to reduce the social security and medicare taxes on the working poor (including the company share). Of all the taxes we have this is the one I would reduce, if I reduced any (given the huge amount of government debt any reduction may well be unwise). But reducing income taxes for those under the median income doesn’t seem like something worth doing to me.

The top 1% earned 22% of all reported income. But they also paid a share of taxes not far from double their share of income. In other words, the tax code is already steeply progressive.

chart of taxes by income distribution

They seem to ignore that income inequality has drastically increased. When you have a system that puts a huge percentage of the cash in a few people’s pockets of course those people end up paying a lot of cash per person. One affect of massive wealth concentration is that the limited people all the money is flowing to naturally will pay an increasing portion of taxes.

It is fine to argue that the rich pay too much tax, if you want. I don’t agree. I think Warren Buffett explains the issue much more clearly and truthfully when he says he, and all his fellow, billionaires (and those attempting to join the club) pay a lower percent of taxes on income than their secretaries do. He offers $1 million to any of them that prove that isn’t true.

And I guess you can say that the top 22% of the income paying the top 40% of the taxes is “steeply progressive.” I wouldn’t call that steep, but… It is nice the graphic is at least decently honest. Saying just “top 1% of taxpayers, those who earn above $388,806, paid 40% of all income ” is fairly misleading. It is much more honest (I believe) to say that “the top 1% (that made 22% of the income) paid…” Those with the top 22% of income paid 40% of the taxes, the next 15% payed 20%, the next 31% paid 26% the next 20% 11% and the final 12% paid 3%. That is progressive. From my perspective it could be more progressive but I can see others saying it it progressive enough.

If 22% to 40% is “steeply” progressive what is 1% to 22%? The income distribution seems to be what? very hugely massively almost asymptotently progressive? The to 1% of people, by income, take 22% of the income, the next 4% take the next 15% of the total income, the next 20% take 31%, the next 25% take 30% and the bottom 50% take 12%. This level of income inequality is much more a source of concern than any concern someone should have about a slightly progressive tax result.

Related: House Votes to Restore Partial Estate Tax on the Very Richest: Over $7 Million – IRS Tax data – Rich Americans Sue to Keep Evidence of Their Tax Evasion From the Justice Department

In the video Warren Buffet says, and is right:

The taxation system has tilted toward the rich and away from the middle class in the last 10 years. It is dramatic and I don’t think it is appreciated. And I think it should be addressed.
…
Hedge fund operators spent a record amount lobbying

What did those bribes “donations” buy the hedge fund managers? The ability to have your grandchildren pay their taxes (with interest) for them.

April 15th, 2010 John Hunter | 1 Comment | Tags: Economics, Financial Literacy, quote, Taxes

Comments

1 Comment so far

  1. USA Individual Earnings Levels: Top 1% $343,000, 5% $154,000, 10% $112,000, 25% $66,000 at Curious Cat Economics Blog on February 27, 2012 2:28 am

    Other interesting data shows that the top 1% earn 16.9% of the total income and pay 36.7% of the total federal income taxes. Those in the top 1-5% earn 14.8% of the total income and pay 22% of the income taxes…

Name (required)

Email (required)

Website

Speak your mind

« China Economy Grows 11.9% in 1st Quarter
Google Posts Good Earning But Not Good Enough for Many »
Copyright © Curious Cat Investing and Economics Blog

    Personal Finance

    • Credit Card Tips
    • IRAs
    • Investment Risks
    • Loan Terms
    • Saving for Retirement
  • Archives

      All Posts
    • March 2021
    • January 2021
    • August 2020
    • March 2020
    • February 2020
    • January 2020
    • May 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • August 2018
    • May 2018
    • February 2018
    • January 2018
    • November 2017
    • October 2017
    • September 2017
    • August 2017
    • July 2017
    • May 2017
    • April 2017
    • March 2017
    • February 2017
    • January 2017
    • December 2016
    • November 2016
    • October 2016
    • September 2016
    • August 2016
    • July 2016
    • June 2016
    • May 2016
    • April 2016
    • March 2016
    • February 2016
    • January 2016
    • December 2015
    • November 2015
    • October 2015
    • September 2015
    • August 2015
    • July 2015
    • June 2015
    • May 2015
    • April 2015
    • March 2015
    • February 2015
    • January 2015
    • December 2014
    • November 2014
    • October 2014
    • September 2014
    • August 2014
    • June 2014
    • April 2014
    • March 2014
    • February 2014
    • January 2014
    • December 2013
    • November 2013
    • September 2013
    • August 2013
    • July 2013
    • June 2013
    • May 2013
    • April 2013
    • March 2013
    • February 2013
    • January 2013
    • December 2012
    • November 2012
    • October 2012
    • September 2012
    • August 2012
    • July 2012
    • June 2012
    • May 2012
    • April 2012
    • March 2012
    • February 2012
    • January 2012
    • December 2011
    • November 2011
    • October 2011
    • September 2011
    • August 2011
    • July 2011
    • June 2011
    • May 2011
    • April 2011
    • March 2011
    • February 2011
    • January 2011
    • December 2010
    • November 2010
    • October 2010
    • September 2010
    • August 2010
    • July 2010
    • June 2010
    • May 2010
    • April 2010
    • March 2010
    • February 2010
    • January 2010
    • December 2009
    • November 2009
    • October 2009
    • September 2009
    • August 2009
    • July 2009
    • June 2009
    • May 2009
    • April 2009
    • March 2009
    • February 2009
    • January 2009
    • December 2008
    • November 2008
    • October 2008
    • September 2008
    • August 2008
    • July 2008
    • June 2008
    • May 2008
    • April 2008
    • March 2008
    • February 2008
    • January 2008
    • December 2007
    • November 2007
    • October 2007
    • September 2007
    • August 2007
    • July 2007
    • June 2007
    • May 2007
    • April 2007
    • March 2007
    • February 2007
    • January 2007
    • December 2006
    • November 2006
    • October 2006
    • April 2006
    • March 2006
    • January 2006
    • December 2005
    • October 2005
    • July 2005
    • May 2005
    • April 2005
    • April 2004