🚀 go-pugleaf

"Brian" <drmorrisnospam@comcast.net> wrote

> "tonyp" <tonyp@world.std.com> wrote:
> >1) What percentage of all _income_ the bottom 50% earn.

> !3% and they pay 3% of indivudual federal income taxes.
> The top 1% earns 19% of income and pays 37% of the taxes.
> http://www.kiplinger.com/features/archives/2006/10/income.html


Note that, once again, the cited numbers are exclusively about the "income
tax", as if that's the only tax that matters.  Greg Mankiew, citing the CBO,
says:
http://gregmankiw.blogspot.com/2006/04/are-rich-paying-enough.html


     Now that it is tax season, there is sure to be a bunch of articles
     and op-eds on the question of whether the rich are paying their
     fair share in taxes.

     Before one starts expressing opinions, it is good to look at the facts.
     The Congressional Budget Office is one place to look for the data
     on such issues. Here is the Total Effective Federal Tax Rate
     (all federal taxes divided by income) for different income groups,
     according to a CBO report, for 2005:

     Lowest quintile 5.5 percent
     Second quintile 12.0
     Middle quintile 15.6
     Fourth quintile 19.6
     Highest quintile 26.3

     Top 10 percent 27.8
     Top 5 percent 29.0
     Top 1 percent 31.1

     Does the average tax rate not rise sufficiently with income?
     Or does it rise too much? Or is it just right? Economics alone
     does not provide the answer. But when thinking about the issue,
     these are the key numbers that people should focus on.

Mankiew is right that economics cannot answer the question of "fairness".
But if we think it's "unfair" for anyone to pay more than, say, 25% of his
total income to the feds, then we have to do some arithmetic.  Brian says
the top 1% pull in 19% of the nation's total income.  If they now pay 31% of
it into the Treasury, they are chipping in about 6% of all federal revenues.
Reduce their effective taxes to 25%, and they're suddenly chipping in less,
by about one part in six.  A 1% drop in federal revenues may not seem like
much, but it's serious money.  Suppose we make it up by asking the bottom
half of the population to take up the slack.  According to Brian, the bottom
half pay just 3% of all income taxes.  Making them pay 4% would be a 33% tax
increase in their taxes.  If Brian wants to make half of all Americans pay
33% more in federal taxes, he is welcome to try.  Politically, it seems like
a losing proposition, but the American public has obviously been known to
fall sucker to voodoo economics before this.

Note, by the way, that if we wanted to bring the entire top quintile down to
an effective tax of 25%, the hit to the Treasury would be enormous.  Either
the "bottom 80%" of the population would have to face huge tax increases, or
the federal budget would have to be cut in major ways.  Perhaps we could
eliminate the Air Force :-)


> And I haven't yet seen anything to support the claim about the upper
> income people not paying taxes to equal what their costs are.


Well, the Air Force defends both you and Bill Gates.  It's hard to tell
whether it is providing more service to you or to Bill.  Likewise for the
SEC, the USPTO, and NASA, to name but a few.  Perhaps you and Bill should
each be paying the same _amount_ to fund these agencies, if you're each
getting the same amount of benefit from them.

-- TP