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View Diary: How are the rich getting richer? The more they make, the lower income tax rates they pay. Face palm. (141 comments)

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  •  Ian, this information (0+ / 0-)

    taken from the CBO website seems to suggest that the rich pay more than their fair share, at least with respect to Federal income taxes. The report "Average Federal Taxes by Income Group" is dated June 1, 2010:

    The federal tax system is progressive—that is, average tax rates generally rise with income. Households in the bottom fifth of the income distribution paid 4.0 percent of their income in federal taxes, the middle quintile paid 14.3 percent, and the highest quintile paid 25.1 percent. Average rates continued to rise within the top quintile: The top 1 percent faced an average rate of 29.5 percent.

    "Higher-income groups earn a disproportionate share of pretax income and pay a disproportionate share of federal taxes. In 2007, the highest quintile earned 55.9 percent of pretax income and paid 68.9 percent of federal taxes; the top 1 percent of households earned 19.4 percent of income and paid 28.1 percent of taxes. The share of taxes paid by high-income groups exceeded their share of income because average tax rates rise with income. In all other quintiles, the share of federal taxes was less than the income share. The bottom quintile earned 4.0 percent of income and paid 0.8 percent of taxes, and the middle quintile earned 13.1 percent of income and paid 9.2 percent of taxes."

    Can you comment please?

    Thank you!

    •  The information I cited came through (0+ / 0-)

      the NYT, from one of their top economics columnists, and was vetted by their editorial staff. I'd suggest you contact them, as the source of the information.

    •  Define fair share (2+ / 0-)

      You are using the wrong metric to measure “fair share”.

      The proper measure of who pays their fair share of the cost of government is not measured by the share of the total personal income taxes paid by the richest 1% or 5%, but by the share of the total cost of government paid by the richest 1% or 5%.

      Thus, the richest 1% of US taxpayers may have paid about $408 billion in personal income taxes in 2006, out of $1.5 trillion in personal income taxes paid by everybody, but the total cost of government in 2006 amounted to about $2.9 trillion.

      In other words, personal income taxes paid for only about 50% of the cost of government in 2007 and the rest was paid with social security taxes, excise taxes and loans to the government.

      Calculated thusly, the richest 1% paid for about 14% of the cost of government while earning 22% of the country’s total income, and the richest 5% received 36% of the nation’s income and paid only 32% of the cost of the government that helped make that income possible.

      The metric you use would  apply equally to an argument that corporations  pay too much in taxes because they pay 100% of all corporate income taxes. The fact may be true, but it is irrelevant to the question of  whether corporations pay too much or too little in taxes.

      The value of government does not financially benefit each person equally. Who benefits more from the US Navy in the Persian Gulf: a coal miner in West Virginia or the CEO of Exxon Mobil? The richest should pay disproportionately more of the cost of government because they benefit disproportionately more. [I wrote a diary on this issue several years ago.]

      •  I focused my comments on Federal income (0+ / 0-)

        taxes since the subject of the diary is Federal income tax rates.

        I'm interested in reading your diary. Can you provide a link? Actually, I think you have to look more broadly than someone's  contribution to the cost of government. I think you also have to include an individual's contributions to private entities, such as charities and their contributions to society in general.

        Your question about the relative benefit a coal miner or the XOM CEO obtains from a secure Persian Gulf is interesting. I think a convincing argument could be made that the coal miner benefits more. A secure Gulf keeps the price of oil and gasoline in check, and a miner spends a much higher percentage of his income on gasoline than a CEO. On the other hand, a secure Gulf could keep the XOM share price high benefiting the CEO. Then again, if the CEO does his job well, XOM will have successful R&D programs which will improve oil refining economics, which will benefit our military and society in general. These are very complex arguments.

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