Wolf Richter, Tom Haugh, and Kathy Dervin discuss this problem
David Haggith writes
Year after year around tax time, a tired war horse of a story gets trotted out about how the heavily burdened rich already shoulder eighty percent of the tax load. Poor rich. They are oxen doing the heavy pulling to make things easier on the rest of us dumb cows. Thank God we have them!
Don’t believe a word of it!
… It is hard for people to believe that the huge majority of all the money made in the US is going to such a small percentage of the population. As a result, when they hear that this group is paying 80% of the taxes (oh my!), they think that group is clearly pulling more than its fair share of the load. (Let’s hope the rich never get mad at us for putting this load on them and decide to stop carrying it.) I mean, expecting the smallest number of people to carry 80% of the load is crazy!
Actually, the crazy truth is that so much money is made by so few that their taxes only appear to be an unfair burden. The wealthy’s portion of all income tax paid in the country looks outlandishly huge, yet it is lower than their portion of all money made in the country. (As has been often said, “I’d love to pay their taxes.”) In fact, the higher you look into the wealth strata, the crazier the truth becomes.
The higher tax rates for the wealthy are fiction because they don’t apply to the real world of the rich … especially the really rich. The 23.8% that the rich pay on capital gains, which is half of their income, is no more than what the middle class pay on theirs … and less than some of the middle class pay.
…The higher income-tax bracket is how your government pretends to be taxing the rich more than anyone, while actually taxing the richest of the rich far less. Those who are in the top ten percent of the income stream pay an even lower percentage of their total income in taxes than the top twenty, and the top ten percent of the top ten percent (the infamous One Percenters), pay a lower percentage in taxes still…. The top tenth of a percent of the top one percent pay only 17.6% tax on their income … and that’s on the dollars of income they actually report. Those below them in the top one percent paid 23 cents on the dollar (that is, on the dollars that they actually report as income).
…The higher you are within the crème de la crème, the faster your income is rising, too. (Go figure. You’re paying less in taxes on all you make; so, of course, your income is rising faster than anyone else as you compound this by putting your money out to make money.) Between 2003 and 2012, the bottom 99.9 percent of the top one percent (the poorest of the super rich) saw their income grow by $412,000 a year. That’s dreadful compared to the top tenth of a percent of the top one percent (1,361 American households). This cream off the top of the cream saw its income grow by $84.6 million annually per household!)
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