# Where are we on the Laffer Curve? **URL:** \ **Category:** Great Debates\ **Created:** [April 24, 2010, 1:44pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199 "2010-04-24T13:44:38Z")\ **Posts on this page:** 13\ **Page:** 6
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 8:53pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/101 "2010-04-27T20:53:18Z")
> [@Chief\_Pedant](#): > > THE US DOES NOT HAVE LOW TAXES “ESPECIALLY ON THE PEOPLE WITH THE MOST MONEY.” IT MAY HAVE LOW TAXES OVERALL, BUT AS A MATTER OF FACT, THE WEALTHIEST 10%–BY INCOME, AT LEAST–IN THE US PAY MOST OF THE FEDERAL TAX BURDEN. THIS IS PARTLY BECAUSE THEY HAVE THE MOST MONEY AND PARTLY BECAUSE OUR PROGRESSIVE SYSTEM ASSIGNS TO THEM AN AMOUNT ABOUT DOUBLE–AT LEAST FOR THE TOP 1%–IN PROPORTION TO THEIR INCOME. Low is either a subjective term or a relative term. There is no point in debating our subjective opinions about what is low. However, relatively speaking, we can compare the relative tax burden on the rich here to the tax burden on teh rich in other countries. > [@](#): > > The only thing that brings any credence to the idea that the wealthy in the US pay “low taxes” is an a priori assumption that taxes should be progressive and that from each should come taxes according to his ability to pay. Or we can compare their tax burden to the tax burden in other countries or the tax burden they would have shoudlered in the past. > [@](#): > > This is a lovely topic and perhaps suitable for Great Debates (the opposing view wouldn’t get far on this board) but, sadly, is unrelated to “high” and “low” taxes, and which chunk of folks pay them. Sadly, neither is your argument. continued… ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 8:55pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/102 "2010-04-27T20:55:08Z")
> [@](#): > > In terms of total federal tax in the US, the top 1% pay about 40% of Federal Income tax and about 28% (by **DSeid** ’s cite, IIRC) of all federal taxes. Here are the effective tax rates in 2007. [www.urban.org/publications/1001091.html](http://www.urban.org/publications/1001091.html) [quote] That does not lend credence to an idea that taxes for the wealthy are somehow “low” unless you buy into the notion (it may be genetic for fiscal liberals) that tax must be progressive to be considered high or low./quote] No, taxes must be progressive to be considered fair. > [@](#): > > And before you get too floofed up, I believe in progressive taxes. As I’ve pointed out, the top 1% pay double in Federal Income tax relative to income; the bottom 47% paid none at all this year. Now that’s Progressive! 😉 That is a flaw in our tax system. Everyone should pay something even if it is 1%. I understand that 1% might mean the difference between hot dogs or roast chicken for dinner for some people but it is not generally a good idea to have people entirely detached from the cost of government. Continued… ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:06pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/103 "2010-04-27T21:06:28Z")
[/quote] Europe, at least, has higher tax burdens. However this is because a lot more of them pay a lot more taxes. I am unable to find a system anywhere where the top 1% carry as high a proportion (relative to income) or an absolute percentage of the national tax burden as the US. [/quote] And you don’t think concentration of wealth has anything to do with this? [www.taxfoundation.org/news/show/250.html](http://www.taxfoundation.org/news/show/250.html) continued… ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:09pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/104 "2010-04-27T21:09:16Z")
A lot of the extra tax burden carried by the top 1% is a matter of higher incomes. For example in 1980, the top 1% of taxpayers earned 138 billion while the bottom 50% earned 288 billion (the top 1% earned about half what the bottom 50% earned). The top 1% paid about 47 billion in income taxes compared to 18 billion paid by the bottom 50% (the top 1% paid about 2.5 times as much as the bottom 50%), this doesn’t count payroll taxes, sales taxes or any other taxes than the most progressive of our taxxes, the income tax. In 2007 the top 1% earned about 2 trillion while the bottom 50% earned about 1 trillion. The top 1% now earned twice what the bottom 50% earned. So if you earn between 100 and 500K you are carrying more than your historical share compared to the bottom 50% (who arguably need the money) and the top 1% (who arguably do not need it as much). > [@](#): > > I do not say it doesn’t exist, but if it does, I need help finding it. Our rich–and thank goodness there are so many of them–are carrying us (well, and our grandkids, too, but that’s another GD…). I’m just moaning about this notion that our rich have “low taxes” as if they are skating, somehow and as if our system is not progressive. We’re not progressive relative to other developed countries [www.mpifg.de/pu/workpap/wp06-1/tab\_1.gif](http://www.mpifg.de/pu/workpap/wp06-1/tab_1.gif) Of course none of this takes into account other taxes that are not nearly as progressive as the income tax (which, btw account for the majority of federal tax revenue). What we need are more tax brackets at the top (say at the 500K, 1MM, 2MM, 5MM, 10MM levels etc.) and at least SOME tax liability at the bottom of the scale (even if it only 1%). continued… ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:11pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/105 "2010-04-27T21:11:03Z")
These charts show that while the wealthiest among us carry a large share of the tax burden, it also shows a shifting concentration of wealth into fewer and fewer hands. continued… ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:12pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/106 "2010-04-27T21:12:03Z")
The top 1% saw their effective tax rate drop from 34% in 1980 to 22% in 2007. The bottom 50% saw their effective income tax rates drop from 6% to 3% but others saw very little in the way of tax relief. The folks in the top 10% who aren’t in the top 1% din’t see very much tax relief. (sorry about all the serial posting. There is something in one of my sentences that is offensive to the filter and I am trying to figure out which words to remove) ---
**Author:** ![Chief\_Pedant](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@Chief\_Pedant](https://boards.straightdope.com/u/Chief_Pedant)\ **Post date:** [April 27, 2010, 11:35pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/107 "2010-04-27T23:35:35Z")
> [@Damuri\_Ajashi](#): > > The top 1% saw their effective tax rate drop from 34% in 1980 to 22% in 2007. The bottom 50% saw their effective income tax rates drop from 6% to 3% but others saw very little in the way of tax relief. The folks in the top 10% who aren’t in the top 1% din’t see very much tax relief. > > (sorry about all the serial posting. There is something in one of my sentences that is offensive to the filter and I am trying to figure out which words to remove) I realize on a board this liberal everyone is desperate to teach me how much the rich skate in the US…and how much wealth the rich have in the US (I’m pretty sure this is related to why other people want to move here, but that’s a different story too…). Has anyone found any good chart on what the top 1% pay as a share of total taxes in their country for any other country? That, and not all this other bs, is what precipitated my comments. At issue (as far as my posts go) is this: Do the rich in the US have low taxes compared with with other countries? Not: “Relatively” low tax rates cuz they are so stinking rich. Low taxes. Not: Disproportionately low taxes compared to how much of their wealth we should be re-distributing. Just plain ol’ low taxes. Low, as in less money per person or low, as in a smaller share of all total taxes than the top 1% elsewhere. I want to see a defense of the notion that in the US it’s “especially the rich” who have low taxes. I realize we may all be skating and borrowing, but I don’t get the idea that in the US it is “especially the rich” who are skating. ---
**Author:** ![spinky](https://avatars.discourse-cdn.com/v4/letter/s/59ef9b/32.png) [@spinky](https://boards.straightdope.com/u/spinky)\ **Post date:** [April 27, 2010, 11:48pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/108 "2010-04-27T23:48:56Z")
> [@Chief\_Pedant](#): > > Just plain ol’ low taxes. Low, as in less money per person I am confused. Are you now suggesting we need a **regressive** tax so the top 1% don’t pay taxes proportional to their income? Because a few posts ago, you said you support progressive taxes. ---
**Author:** ![erez](https://avatars.discourse-cdn.com/v4/letter/e/e47c2d/32.png) [@erez](https://boards.straightdope.com/u/erez)\ **Post date:** [April 28, 2010, 5:19am UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/109 "2010-04-28T05:19:52Z")
> [@DSeid](#): > > **erez** , > > 1. It is unclear to me if that newer chart addresses the same specific question, looking specifically at the tax burden for the wealthiest. But let us assume it does. Right on top of both links: “Our 2006 Tax Misery & Reform Index,” “2009 Tax Misery & Reform Index.” Can’t get much clearer than that. > [@DSeid](#): > > 1. In that chart overall “USA” is placed in the lower third. And indeed USA-Texas in in the lower grouping. Of the Western nations USA-Illinois is only above Ireland and Australia and is below all other Western countries listed. Are you saying that state taxes are not taxes? Unless you are, state taxes do count if you compare the tax burden on individuals, so using just “USA” when tax data for states is known and clearly presented is misleading. Note that in the few cases where other countries impose such regional taxes, they are included too, for example “Canada/Ontario.” Why are you ignoring what I said about the top marginal state income tax rate in most states being higher than in Illinois and Texas? Here is the link if you don’t believe me: [http://www.taxadmin.org/fta/rate/ind\_inc.pdf](http://www.taxadmin.org/fta/rate/ind_inc.pdf). There are only 10 states with the top tax rates lower than Illinois. Therefore you were absolutely wrong in claiming that the US is in the lower part of this chart. > [@DSeid](#): > > 1. One out of three USA-(state)s listed is indeed at the edge of the upper third and above several Western countries (as well as still below about as many others): New York. Pertinent to this op it is interesting that that (relative to other American states) higher tax burden of the wealthiest has not hobbled that state which is, to this day, still home to our financial centers. You may want to read [BBC News - London and New York tied as top financial centres](http://news.bbc.co.uk/2/hi/business/8563525.stm). NYC \*\*was \*\*the undisputed financial capital of the World. It is not so undisputed anymore. So if that’s the criteria you want to use, the facts are arguing against you. Here is an interesting stat from [http://www.census.gov/compendia/statab/2010/tables/10s0013.xls:](http://www.census.gov/compendia/statab/2010/tables/10s0013.xls:) New York lost 1,575,864 people to domestic migration from 2000 to 2008, the most of all states. California (another state with one of the highest top income tax brackets) was second on that list. > [@DSeid](#): > > 1. Indeed, no fact based analysis of how things are includes speculative predictions about what will or won’t happen in the future. The health care reform bill and its associated future tax increases are not some speculative predictions but the current law of the nation. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [April 28, 2010, 6:39am UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/110 "2010-04-28T06:39:49Z")
**erez** clearer would be if the newer chart also stated that it was explicitly reporting the highest rates, rather than merely sharing a title. But again, I assume that you are correct and it does. And you are correct that state taxes should be counted and that this newer version by _Forbes_ gives a more complete picture than the older one that I had found. It would be disingenuous of me to make the point that the wealthiest’s share of total taxes including state and local is not so high and that that number is more meaningful than just all Federal taxes (let alone just income tax) and then not apply that same logic here. I ignored what you said about the other states because I did not have access to the chart that proved your point and had no idea if your statement was accurate or not. You have now shown it to be accurate and I acknowledge it. Counting state income taxes, as we should, the US is pretty middle of the road on _Forbes_ list. (Especially given that the largest population centers are in higher tax states such as New York and California.) Not high, but not particularly low either. OTOH New York has had relatively high state taxes for a long time now and such has never gotten in the way of it being “home to our financial centers”. Your statement about it no longer being undisputed world leader is unrelated to that statement. And it had no problem growing in population while it had a higher tax rate either. Also reporting absolute size population movement means little when discussing the two most populous states. Percent change is what matters. (A 2% change in California is the same as a 1005 change in Vermont.) And your link didn’t work. Per [this one](http://www.factmonster.com/ipka/A0004986.html) though New York grew by 0.6% from 2003 to 2006 and California grew by 2.9% in that same time period. Hard to make too much out of that. And I may be mistaken but I thought the tax impact of the healthcare reform package was still very much to be determined despite some statements by some on both sides to the contrary. Finally getting back to the op, this [graphic](http://www.balloon-juice.com/wp-content/uploads/2009/03/graph.jpg) is cool. Look at when top marginal rates were high and when they were low and think about what the economy did during each of those times. Most generously put there is no empirical evidence here for any Laffer curve. Like many of **CP** statements, it was just a made up falsehood. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 28, 2010, 3:55pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/111 "2010-04-28T15:55:57Z")
> [@Chief\_Pedant](#): > > Has anyone found any good chart on what the top 1% pay as a share of total taxes in their country for any other country? That, and not all this other bs, is what precipitated my comments. At issue (as far as my posts go) is this: > > Do the rich in the US have low taxes compared with with other countries? Just to clarify what you seem to be arguing, you are saying that because the receipts from high income earners constitutes a significant to large percentage of the grand total of tax collections each year from all sources, therefore the wealthy do not pay “low taxes.” (I’m not trying to skew your argument in any way, I simply want to insure I’m understanding you correctly.) If I stated your case somewhat accurately, let us imagine a tax system in which there is a 5% marginal tax rate on income above a million dollars a year, and no taxes on income below that. If that were the case, then 100% of tax revenue would come from high income earners. Does that mean in your view that the wealthy would not be paying “low taxes?” ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 28, 2010, 8:51pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/112 "2010-04-28T20:51:31Z")
> [@Chief\_Pedant](#): > > Has anyone found any good chart on what the top 1% pay as a share of total taxes in their country for any other country? That, and not all this other bs, is what precipitated my comments. At issue (as far as my posts go) is this: > > Do the rich in the US have low taxes compared with with other countries? One of the links (either in this thread or in this one: [http://boards.straightdope.com/sdmb/showthread.php?t=561046&page=4](http://boards.straightdope.com/sdmb/showthread.php?t=561046&page=4) )has a chart of the US effective tax rates compared to other industrialized countries, which shows the US with relatively low effective tax rates, but it doesn’t segregate by percentiles. However I wold suggest that the fact that we have lower top marginal tax rates than other countries it stands to reason that the wealthy in other countries have higher effective tax rates. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [April 28, 2010, 9:08pm UTC](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199/113 "2010-04-28T21:08:09Z")
> [@md2000](#): > > Many people seem to be up in arms over Obama’s promise to tax people higher if the make more than $250,000 a year. How many people here come CLOSE to $250K/year? When I worked at a place where my bonus-induced pay peaked over $100,000/yr, I suspect there were only 2 or 3 people out of the 1500 there who made more than $250,000. Of course, the head office would be a different story… Nitpick: IIRC, the detailed pledge was for _couples_ over $250,000, or individuals over $200,000. So a couple making 130K each would be among those getting their taxes raised, if they were married and filing jointly. [Previous page](https://boards.straightdope.com/t/where-are-we-on-the-laffer-curve/537199.md?page=5)