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1%-ers Share Of Taxes Has Doubled Since 1980s

From the Wall Street Journal:

Top earners feel bite of U.S. tax increases

By John D. McKinnon | April 13, 2014 

The jump in federal tax rates that kicked in last year is causing sticker shock for many higher earners this tax season. That, in turn, is rekindling a debate over a question likely to smolder for a long time: How much more could–or should–taxes go up on the well-to-do?

What debate?

Higher earners’ share of the overall federal tax burden has been climbing fairly steadily, even before lawmakers negotiated the fiscal-cliff deal at the end of 2012.

The latest tax-rate increases, passed at the start of 2013, have added to that burden, at least for the highest earners. Those changes included a bump in the top ordinary income rate to 39.6% from 35%, a limit on itemized deductions and an increase in the top rate on investment income. The Obama health-care overhaul also included some tax increases, including another boost in investment taxes.

Largely as a result, overall federal tax receipts from the top 1% of earners rose by 1.3 percentage points to 29.3% of all federal tax revenue, the nonpartisan Tax Policy Center estimates.

In other words, the top 1% now pay almost 30% of all federal tax revenue. (Not just income tax.)

The share of overall income for the top 1%, now at around 17%, according to the Tax Policy Center, has roughly doubled since the early 1980s, according to Congressional Budget Office figures.

In other words, the share of all federal tax revenue paid by the 1% has doubled since the 1980s.

It isn’t just the super-rich who find their share of the burden growing. The increase in the individual income tax burden borne by the top 20%–including, say, couples with two children making more than $150,000–has gone from 65% in 1980 to more than 90% as of 2010, the most recent year available, according to the CBO.

In other words, the top 20% of income earners have gone from paying 65% of all federal taxes in 1980 to 90% in 2010.

Ahead of Tuesday’s tax-filing deadline, higher-income people have been coming to grips with the new reality as they review their returns for 2013.

Rob Babek, partner in charge of Marcum LLP’s Los Angeles office, said several of his clients have seen their tax bills increase by $100,000 or more. One business owner saw hers rise from around $600,000 in 2012 to more than $700,000, driven mainly by changes in investment-tax rates on the $2 million in dividends she received from her firm. "She was really shocked by the increase," Mr. Babek said. "That one hit home."

Elections have consequences. As does class warfare. Maybe someday ‘the rich’ Democrats will realize this.

The issue of how much to tax top earners is often debated now in political and economic circles. One camp, led by economists such as Emmanuel Saez of University of California at Berkeley, focuses on the rising gap in incomes between rich and poor. They advocate significantly higher tax rates on the rich…

Naturally. The rich never pay enough.

Others think the tax burden on high income people may already be too heavy. "Potentially it is too high," and could be causing economic distortions, said Jeffrey Miron, an economist at Harvard University and the libertarian Cato Institute. "That can have serious costs for economic activity," he added…

What a crazy notion.

Meanwhile, we have this thoughtful piece from the Atlantic Magazine:

Rich People Are Mad They Have to Pay So Many Taxes on Their Ballooning Incomes

By Philip Bump [sic] | April 14, 2014

No group of Americans is less happy about the taxes they pay than the wealthy, The Wall Street Journal reports, glossing over the fact that they are paying more in taxes in large part because they are seeing most of the increase in incomes. This is like being mad that you paid more in sales tax on your Bentley than your doorman paid in taxes for a Ford.

The Journal, being the literal journal of Wall Street, takes great pains to articulate the anguish of the wealthy while downplaying that contributing factor…

How dare those ‘rich’ 20%-ers (couples with two children making more than $150,000) complain about having their ‘share’ of taxes going up from 65% in 1980 to more than 90% as of 2010!

How can anyone be so selfish?

This article was posted by Steve on Tuesday, April 15th, 2014. Comments are currently closed.

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