RE: Taxing Thoughts
Along with the chart that Andrew mentioned, the related WSJ piece included some observations worth mentioning. But first, earlier this month, Stephen Moore previewed the same IRS data used for the chart:
New data from the IRS will be out in a few weeks on who pays how much in taxes. My contacts at the Treasury Department tell me that for the first time in decades, and perhaps ever, the richest 1% of tax filers will have paid more than 40% of the income tax burden. The top 50% will account for 97% of all federal income taxes, while the bottom 50% will have paid just 3%.
And that richest 1% isn’t comprised of a bunch of old money, Hamptons-dwelling WASPs. As today’s WSJ piece explains, millionaires aren’t just born, they are also self-made:
We also know from income mobility data that a very large percentage in the top 1% are “new rich,” not inheritors of fortunes. There is rapid turnover in the ranks of the highest income earners, so much so that people who started in the top 1% of income in the 1980s and 1990s suffered the largest declines in earnings of any income group over the subsequent decade, according to Treasury Department studies of actual tax returns. It’s hard to stay king of the hill in America for long.
The most amazing part of this story is the leap in the number of Americans who declared adjusted gross income of more than $1 million from 2003 to 2006. The ranks of U.S. millionaires nearly doubled to 354,000 from 181,000 in a mere three years after the tax cuts.
And, with more millionaires….
Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts.
Moore explained that we shouldn’t be surprised by this:
Economist Glenn Hubbard of Columbia University has shown that in 1970, when the highest tax rate was 70%, the top 1% shouldered 16.7% of the income tax burden. Today the top tax rate is 35% and the same class of taxpayers pays a whopping 39% of the burden. The worst way to “soak the rich,” Mr. Hubbard finds, is to raise tax rates.
From the Los Angeles Times July 24, 2008 A new low in the high life: As Candy Spelling’s condo deal illustrates, so much wealth in the U.S. is concentrated in so few hands. Will Obama or McCain address this issue? by Tim Rutten July 23, 2008 A couple of front-page stories in Tuesday’s papers — one from the East Coast, the other from the West — frame a pretty effective portrait of these United States in this election year. With unemployment climbing across the country, the New York Times reported that “for the first time since the women’s movement came to life, an economic recovery has come and gone, and the percentage of women at work has fallen, not risen, the Bureau of Labor Statistics reports. Each of the seven previous recoveries since 1960 ended with a greater percentage of women at work than when it began.” Working women now earn a third of America’s total household income, and by and large, only those homes with a working wife have made real gains in their standard of living over the last eight years. Yet, over that same period, the percentage of women employed outside the home has fallen to where it was 12 years ago. Meanwhile, the median hourly pay of women 25 to 48 years of age has fallen from $15.04 in 2004 to $14.84 last year. This corrosive pattern holds true, according to the federal statistics, for all American women, regardless of education, race, ethnicity or marital or familial status. In other words, things are tough all over, particularly if you’re a woman — unless, of course, you’re Candy Spelling. As the Los Angeles Times’ Roger Vincent reported Tuesday, television mogul Aaron Spelling’s widow has paid $47 million for a 16,500-square-foot, two-story penthouse condominium atop a new building… Read more »