Do the rich pay more taxes?

[sheriffjt]

This is my first time posting, but I had to comment on the question, “Do the rich pay more taxes?” It seems that every one has forgotten that there are more taxes than income taxes. Payroll taxes are one of the largest for those earning less than $30,000. Sales taxes, while everyone pays them, are themselves flat taxes, as people making $1,000,000 don’t buy 100 times the food as those making $10,000. In my home state of Louisiana, the people in the bottom 10% pay nearly 70% of their earnings in taxes, while the top 10% pay less than .5%. While this is a percentage of earnings rather than gross dollars, it does give plenty of reasons to stop crying for the tax spending of the rich.

[Kat]

So the rich pay very little tax?

Actually, the fact that income tax is not the only tax is addressed in that column:

The income tax is progressive for several reasons, the cynical one being that there are a lot more poor voters than rich ones. The practical reason is that a progressive income tax overcomes the regressivity of the sales tax, which falls most heavily on the poor, and the property tax, which falls most heavily on the middle class. Some analysts say total taxes as a percentage of income are about the same for all income levels.

Does anyone know which analysts Cecil is paraphrasing there or where one could look at their data?

[Kat]

And could a nice moderator fix my link coding up there? I have chocolate and rum available for the required bribes.

[CurtC]

Your stat that the top 10% pay less than 0.5% in taxes is way off. There are not many deductions nowadays, other than several middle-class ones that have crept into the code since the 1986 simplification. I’m in the top 10% (I think I would be around the 95th percentile), and I pay over 20% of my gross income in just federal income tax. Add social security tax, property taxes, and sales taxes (there is no state income tax in Texas), and the proportion is around 45%. For the people making really large amounts, the income tax bite increases substantially, however the others go down as a proportion (but still generally increase in real dollars).

Cecil’s column states that Bartlett and Steele found that tax “reforms” are really to reduce the burden on the rich. I think this is a half-truth. What it neglects to mention is that in non-reform years, tax rates on the rich steadily increase until they get to a point where they’re a significant drag on investment. The government wants to lower their rates, and must put the reduction in a “reform” mantle so that Joe Sixpack and Sally Housecoat will swallow it. If there’s anything wrong with this, it’s the creeping up of the rates in the first place, and the fact that selling it as general reform is a little duplicitious, not that the rich’s taxes don’t need to be lowered.