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Old 01-30-2008, 12:03 PM
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Quote:
Originally Posted by gene430 View Post
It's amazing what the facts are compared to what the politicians tell you. Here are 10 truths about our taxes pulled from official IRS data. These are facts from the data, not spin or massaged.
I won't dispute the actual numbers (except for "38% of income goes to IRS". That's simply wrong. The federal budget is only about a sixth of the economy -- and much of that is borrowed money, not taxation. And only part of that money comes from income tax).

I do quibble with the complete lack of context.

For instance, average tax burden is less important than median tax burden.

And income taxes are only one part of the tax structure. Throw in payroll taxes, for instance, and the burden shifts toward lower-income workers.

And all the sympathy for wealthy taxpayers ignores an important factor -- what share of income and wealth those taxpayers receive.

If the top 1% of taxpayers take home 25% of the income, then it would be completely unsurprising if they paid 25% of all income taxes, even with a flat tax.

Here's a decent look at income share and tax burden:
http://www.cbo.gov/ftpdoc.cfm?index=...ence=0#table1A

In 2001, the top 20% of taxpayers earned about 52% of national income.

Their income tax burden was higher -- 82.5% -- but if you look at total federal tax burden, it's only 65.3%. That's only slightly higher than their income share, and to be expected in a mildly progressive tax system.

Oh, regarding that claim that the average family pays 38% of taxes to the IRS? Complete bunk. As you can see from the table, even for the highest quintile, the effective income tax rate was just 16.3%. For the middle class it was only 3.8%. The overall income-tax rate was 10.4%.

Finally, regarding the "wealth distribution" claim: while that may be a mild effect of a progressive tax system, it clearly has not had that effect over time. Since 1979, the share of national wealth earned by the poorest 20% of households has fallen from 5.8% to 4.2%.
The share earned by the next-poorest 20% has also fallen, from 11.1% to 9.2%.

Over that same time period, the share of wealth earned by the top 20% has climbed, from 45.5% to 52.4%.

So let's not all cry for the millionaires, okay?
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