President Barack Obama and Democratic leaders in Congress say the wealthy must pay their fair share if the federal government is ever going to fix its finances and reduce the budget deficit to a manageable level.
A new analysis, however, shows that average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. Middle- and low-income families aren’t paying as much as they used to.
For 2013, families with incomes in the top 20 percent of the nation will pay an average of 27.2 percent of their income in federal taxes, according to projections by the Tax Policy Center, a research organization based in Washington. The top 1 percent of households, those with incomes averaging $1.4 million, will pay an average of 35.5 percent.
Those tax rates, which include income, payroll, corporate and estate taxes, are among the highest since 1979.
The average family in the bottom 20 percent of households won’t pay any federal taxes. Instead, many families in this group will get payments from the federal government by claiming more in credits than they owe in taxes, including payroll taxes. That will give them a negative tax rate.
‘‘My sense is that high-income people feel abused by being targeted always for more taxes,’’ Roberton Williams, a fellow at the Tax Policy Center, said. ‘‘You can understand why they feel that way.’’
Indeed, the top 20% of income earners pay 78% of all income tax according to the article, which in America means we have people earning six figures who have to scrape by. What the other 80% are supposed to do, well who knows, we don't matter. As Sam Knight over at Washington Monthly puts it...
...yahoo!
It’s oh so difficult to feel even a subatomic iota of sorrow for the rich here for so many reasons: 1979, of course, marks two years before the start of the Reaganite consensus on executive worship and corporate tax cuts; much of the rich’s income is derived from “unearned” rent-seeking; the elites should be happy to help pay for a society that has helped them prosper; and, due to offshoring and the weakness of organized labor among other factors, lower income workers’ wages haven’t kept pace with their productivity explosion over the past few decades. In short, the wealthy have the money to comfortably pay these “historically high” tax rates — lower still than the high marginal rates that were commonplace throughout the rapid growth post-war era.
Moreover, high tax rates might actually spur growth, in the words of John Judis, by discouraging “the wealthy from rerouting their savings into the kind of speculative activity that helped create the Great Recession,” and, in the words of one small business owner, by encouraging businesses to reinvest their profit before the end of the year.
Or as Duncan Black puts it, America is a country where people are poor if they are making $250,000 a year, but we can't afford to raise the minimum wage to $9 an hour.
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