Top 50% of Wage Earners Pay 96.03% of Income Taxes

[mike bell]

Top 50% of Wage Earners Pay 96.03% of Income Taxes

October 10, 2003

There is new data for 2001. The share of total income taxes paid by the top 1% fell to 33.89% from 37.42% in 2000. This is mainly because their income share (not just wages) fell from 20.81% to 17.53%. However, their average tax rate actually rose slightly from 27.45% to 27.50%.





*Data covers calendar year 2001, not fiscal year 2001 - and includes all income, not just wages, excluding Social Security



This proves that it was not the tax cut that caused revenues from the rich to fall, but the recession and the stock market crash. In other words, you live by the sword, you die by the sword. If you are going to benefit from the rich paying more taxes, due to progressivity, on the upside, you are going to lose more revenue from these people on the downside. This is a good argument for reducing progressivity.

Think of it this way: less than four dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners. Are the top half millionaires? Noooo, more like "thousandaires." The top 50% were those individuals or couples filing jointly who earned $26,000 and up in 1999. (The top 1% earned $293,000-plus.) Americans who want to are continuing to improve their lives - and those who don't want to, aren't. Here are the wage earners in each category and the percentages they pay:

Top 5% pay 53.25% of all income taxes (Down from 2000 figure: 56.47%). The top 10% pay 64.89% (Down from 2000 figure: 67.33%). The top 25% pay 82.9% (Down from 2000 figure: 84.01%). The top 50% pay 96.03% (Down from 2000 figure: 96.09%). The bottom 50%? They pay a paltry 3.97% of all income taxes. The top 1% is paying more than ten times the federal income taxes than the bottom 50%! And who earns what? The top 1% earns 17.53 (2000: 20.81%) of all income. The top 5% earns 31.99 (2000: 35.30%). The top 10% earns 43.11% (2000: 46.01%); the top 25% earns 65.23% (2000: 67.15%), and the top 50% earns 86.19% (2000: 87.01%) of all the income.


The Rich Earned Their Dough, They Didn't Inherit It (Except Ted Kennedy)



The bottom 50% is paying a tiny bit of the taxes, so you can't give them much of a tax cut by definition. Yet these are the people to whom the Democrats claim to want to give tax cuts. Remember this the next time you hear the "tax cuts for the rich" business. Understand that the so-called rich are about the only ones paying taxes anymore.

I had a conversation with a woman who identified herself as Misty on Wednesday. She claimed to be an accountant, yet she seemed unaware of the Alternative Minimum Tax, which now ensures that everyone pays some taxes. AP reports that the AMT, "designed in 1969 to ensure 155 wealthy people paid some tax," will hit "about 2.6 million of us this year and 36 million by 2010." That's because the tax isn't indexed for inflation! If your salary today would've made you mega-rich in '69, that's how you're taxed.

Misty tried the old line that all wealth is inherited. Not true. John Weicher, as a senior fellow at the Hudson Institute and a visiting scholar at the Federal Reserve Bank, wrote in his February 13, 1997 Washington Post Op-Ed, "Most of the rich have earned their wealth... Looking at the Fortune 400, quite a few even of the very richest people came from a standing start, while others inherited a small business and turned it into a giant corporation." What's happening here is not that "the rich are getting richer and the poor are getting poorer." The numbers prove it.

[logs]

Excellent and informative post Mike. Now if you can get the average democrat to read and understand this they may have a chance at actually voting with their brian rather than how they feel toward a group.

[gman1969]

Liberals will continue to pretend these facts don't exist.

I like this thread that BarnesX posted the other day: http://forum.hunting.net/asppg/tm.asp?m=515707

[fng]

I know a man who used to make an outstanding $85,000.00/ year. He now works for $8.00/hr.

Thanks to outsourcing -- but the CEO got a bonus.

(and this is no bull****.)

[strut]

Well fng if that CEO was able to cut 60,000 plus from the budget and still get the job done then he might just deserve a bonus, looks to me like someone was on a gravy train.

[Cougar Mag]

Mike, that is good information, but...........

What's happening here is not that "the rich are getting richer and the poor are getting poorer." The numbers prove it.

Wrong, and income tax has little or nothing to do with the rich getting richer and the poor getting poorer. What it has to do with is even a middle class or lower class worker is finding it harder to make ends meet these days. By way of increasing costs of health insurance, gasoline, vehicles, property taxes, homeownership and on an on, its our buying power that has and is eroding. Not gonna blame that on Bush or any president....its just the way things are these days. And its been happening for more than 30 years. For example, the average wageearner may enjoy a raise every few years if not every year but........those wage increases are always gobbled up by other increasing costs. Part of the reason there are so many families that need both mom and dad to work. I am not sure what if anything can be done, but its a vicious circle that keeps going round and round.

Anyway.....your charts on who pays the most taxes is very interesting and informative.

[Jorgy]

Wrong, and income tax has little or nothing to do with the rich getting richer and the poor getting poorer. What it has to do with is even a middle class or lower class worker is finding it harder to make ends meet these days

I'm agreeing with you, but don't you always find it odd that people who can barely or can't make ends meet have a cell phone, cable TV, eat out 5 days a week, internet connection and so on

[Briman]

Wrong, and income tax has little or nothing to do with the rich getting richer and the poor getting poorer. What it has to do with is even a middle class or lower class worker is finding it harder to make ends meet these days. By way of increasing costs of health insurance, gasoline, vehicles, property taxes, homeownership and on an on, its our buying power that has and is eroding. Not gonna blame that on Bush or any president....its just the way things are these days. And its been happening for more than 30 years. For example, the average wageearner may enjoy a raise every few years if not every year but........those wage increases are always gobbled up by other increasing costs. Part of the reason there are so many families that need both mom and dad to work. I am not sure what if anything can be done, but its a vicious circle that keeps going round and round.

John Stossel addressed this on 20/20 show a week ago.
The reason why people are having a hard time making ends meet with only one income in the family is because 30 years ago we didn't have digital sattelite big screen tvs, DVD players, cell phones, computers with cable internet, 3 or 4 cars in the driveway with at least one having 4wd, Jet skis, snowmobiles, expensive bass boats, 2000 sq ft houses, expensive medical diagnostic tools along with much better health care, etc. People need none of these things to live a normal life, but they choose and demand that they have them.

In my household, we are pretty much to the point where we can live off my income alone, my wife pretty much banks her paychecks, and mine pay all of the bills. Of course we don't have cable TV, cell phones, cable internet, recreational vehicles, and I drive an 9 year old truck that's been paid off for 6 years, my wife drives a 6 year old car that's been paid off for 3 years. The only luxury we have is a new, though average sized house.

[CalHunter]

I'm agreeing with you, but don't you always find it odd that people who can barely or can't make ends meet have a cell phone, cable TV, eat out 5 days a week, internet connection and so on
Jorgy

Good point.

John Stossel addressed this on 20/20 show a week ago.
The reason why people are having a hard time making ends meet with only one income in the family is because 30 years ago we didn't have digital sattelite big screen tvs, DVD players, cell phones, computers with cable internet, 3 or 4 cars in the driveway with at least one having 4wd, Jet skis, snowmobiles, expensive bass boats, 2000 sq ft houses, expensive medical diagnostic tools along with much better health care, etc. People need none of these things to live a normal life, but they choose and demand that they have them.

In my household, we are pretty much to the point where we can live off my income alone, my wife pretty much banks her paychecks, and mine pay all of the bills. Of course we don't have cable TV, cell phones, cable internet, recreational vehicles, and I drive an 9 year old truck that's been paid off for 6 years, my wife drives a 6 year old car that's been paid off for 3 years. The only luxury we have is a new, though average sized house.
Briman

Another good point.

[Tazman]

Just one quick question in regards to this data Mike, was this data before or after tax exemptions?

The reason I ask is because once I take into account all of my write offs my tax rate is a lot lower than before.