The table below is mostly from an October 4, 2007 News Release from the conservative Tax Foundation. They point out that the richest 1% of the tax payers pay more in total taxes than the poorer 90 percent – those that make less than $103,912 a year. (These data are for tax year 2005.)
The last three rows of this table were extrapolated from the original table and added to show the bottom 90, 95 and 99 percentile groups. Adding these rows shows that the bottom 99 percent pay 54 percent more in taxes than the top 1 percent. I think the top 1 percent should pay as much in taxes as the bottom 99 percent – and it won’t cost them that much, see below.
| Tax Return Group | Number of Fed Returns | AGI ($ millions) |
Fed Income Taxes Paid ($ millions) |
Income Split Point |
|---|---|---|---|---|
| All | 132,611,637 | $7,507,958 | $934,703 | – |
| Top 1% | 1,326,116 | $1,591,711 | $368,132 | above $364,657 |
| Top 5% | 6,630,582 | $2,683,934 | $557,759 | above $145,283 |
| Top 10% | 13,261,164 | $3,487,010 | $657,085 | above $103,912 |
| Top 25% | 33,152,909 | $5,069,455 | $803,772 | above $62,068 |
| Top 50% | 66,305,819 | $6,544,824 | $906,028 | above $30,881 |
| Bottom 50% | 66,305,818 | $963,134 | $28,675 | below $30,881 |
| Bottom 90% | 119,350,473 | $4,020,948 | $277,618 | below $103,912 |
| Bottom 95% | 125,981,055 | $4,824,024 | $376,944 | below $145,283 |
| Bottom 99% | 131,285,521 | $5,916,247 | $566,571 | below $364,657 |
What the Tax Foundation didn’t mention in the article, see new table below, is that the average income for the top 1% is $1,200,280 and the average income for everyone else is $45,064. No wonder the top 1% pay such a large portion of total taxes collected – they earn, on average, 27 times more than the bottom 99 percent and earn at least $364,657 a year. Factor in that their effective tax rate is only 2.4 times greater than the rest of us, and you can realize just how much empathy we should feel for them. (Data in this table were extrapolated from the one above.)
Making the richest 1 percent pay the same in total taxes as all the rest of us would raise their effective tax rate from 23.1 percent to 35.6 percent. At that rate, the average income for the mega rich, after paying taxes, would only be $773,039. The poorest among the top 1 percent would be left with just $237,077. How could they possibly survive? What real need would they have to give up?
| Tax Return Group | Effective Fed Tax Rate | Avg. Group Income | Avg. Group Taxes | Income Split Point |
|---|---|---|---|---|
| All | 12.4% | $56,616 | $7,048 | – |
| Top 1% | 23.1% | $1,200,280 | $277,602 | above $364,657 |
| Top 5% | 20.8% | $404,781 | $84,119 | above $145,283 |
| Top 10% | 18.8% | $262,949 | $49,550 | above $103,912 |
| Top 25% | 15.9% | $152,911 | $24,244 | above $62,068 |
| Top 50% | 13.8% | $98,707 | $13,664 | above $30,881 |
| Bottom 50% | 3.0% | $14,526 | $432 | below $30,881 |
| Bottom 90% | 6.9% | $33,690 | $2,326 | below $103,912 |
| Bottom 95% | 7.8% | $38,292 | $2,992 | below $145,283 |
| Bottom 99% | 9.6% | $45,064 | $4,316 | below $364,657 |
As I wrote in a previous posting, “It’s time we all realize that … tax cuts favoring the very wealthy are not what America needs.”
Andy Hailey
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