USA Today is running a piece today that claims the rich are about to be socked by an unprecedented tax hike. Don't believe it.
The USA Today piece notes that the expiration of the Bush tax cuts for the wealthy at the end of 2010, coupled with the 5.4 percent surtax on incomes over $1 million in the House health care reform bill, would hike the nation's top tax rate from the current 35 percent to 45 percent, not counting the increase in Medicare payroll tax that President Obama wants to see on incomes over $250,000.
The piece then quotes Clint Stretch, a "tax expert" at Deloitte Tax LLP, making the charge that any tax rate above 45% for America's wealthiest would represent "levels never seen" because "when tax rates were higher, tax shelters helped reduce the percentage of income paid."
These contentions just don't match up with the IRS data. In 1955, for instance, the 400 highest tax returns filed reported an average income of $12.3 million, in 2006 inflation-adjusted dollars. These taxpayers paid, after exploiting all available loopholes, 51.2 percent of that average in taxes.
By way of comparison, in 2006, the latest year with IRS stats available, America's 400 highest-earning taxpayers collected an average $263.3 million each in income. They paid 17.2 percent of that, after exploiting all the loopholes they could find, in federal income taxes.
The House health care surtax would represent, if enacted, a significant step toward a more equal United States. But taxes on the wealthy overall, even if this surtax passed, would still remain significantly below mid-20th century levels.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality.