"Tax Whats" For the Rich?
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The IRS has released comprehensive tax return data for 2004. The Tax Foundation has parsed the data into various helpful forms.
One of my favorite analyses is how the progressive structure of the federal income tax changes (or doesn't change) year after year. There is much wailing and gnashing of teeth by liberals about how "the rich get richer while the poor get poorer" and "the rich don't pay their fare share" and "only the rich benefited from the Bush tax cuts" and so on.
You can and should peruse the data at your leisure. But here's an excerpt I came up with:
Click to enlarge.
"AGI" is of course Adjusted Gross Income, "Tax" is total federal income tax paid. "Progressivity" is simply the ratio of the two percentages: A Progressivity ratio of 1 means perfectly proportional income taxation; a number greater than one means a disproportionate share of the tax burden; less than one means a lighter tax burden. A ratio of zero would mean no tax liability. The more the progressivity ratios diverge between the rich and the poor, the more progressive the tax burden is.
The data are irrefutable: Clearly the federal income tax has not been becoming a better deal for "the rich." Quite the opposite; their progressivity burden has been consistently higher during the Bush presidency than during the Clinton years. And while the lower 50% of households have seen their share of AGI stay essentially unchanged in the 13-14% range for many years now, their progressivity ratio has been steadily falling — taxes are undeniably becoming more progressive where it matters: for the poor.
There's certainly more to the tax puzzle than these data: the alternative minimum tax, the estate tax, the "Red Tax / Blue Tax" phenomenon, and the death of fiscal federalism. And of course, Social Security and Medicare. Each of which has its inequities and each of which creates its respective distortions in the economy.
Yes, problems and stupidities galore. But the lament that "the rich don't pay their fair share" is simply not among them.
One of my favorite analyses is how the progressive structure of the federal income tax changes (or doesn't change) year after year. There is much wailing and gnashing of teeth by liberals about how "the rich get richer while the poor get poorer" and "the rich don't pay their fare share" and "only the rich benefited from the Bush tax cuts" and so on.
You can and should peruse the data at your leisure. But here's an excerpt I came up with:
Click to enlarge.
"AGI" is of course Adjusted Gross Income, "Tax" is total federal income tax paid. "Progressivity" is simply the ratio of the two percentages: A Progressivity ratio of 1 means perfectly proportional income taxation; a number greater than one means a disproportionate share of the tax burden; less than one means a lighter tax burden. A ratio of zero would mean no tax liability. The more the progressivity ratios diverge between the rich and the poor, the more progressive the tax burden is.
The data are irrefutable: Clearly the federal income tax has not been becoming a better deal for "the rich." Quite the opposite; their progressivity burden has been consistently higher during the Bush presidency than during the Clinton years. And while the lower 50% of households have seen their share of AGI stay essentially unchanged in the 13-14% range for many years now, their progressivity ratio has been steadily falling — taxes are undeniably becoming more progressive where it matters: for the poor.
There's certainly more to the tax puzzle than these data: the alternative minimum tax, the estate tax, the "Red Tax / Blue Tax" phenomenon, and the death of fiscal federalism. And of course, Social Security and Medicare. Each of which has its inequities and each of which creates its respective distortions in the economy.
Yes, problems and stupidities galore. But the lament that "the rich don't pay their fair share" is simply not among them.
Posted by Kip on
3 October 2006
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