Sorry, Obama: The tax code is already more progressive than pre-Reagan
Given the discussion about President Obama’s desire to raise taxes on “the rich” — i.e., families earning more than $250,000 a year — it’s rather convenient that the Congressional Budget Office yesterday published its latest look at earnings and taxes paid by income level. It tells us a couple of worthwhile things.
First, as I mentioned in a comment yesterday evening, it tells us the U.S. tax code is already rather progressive. Here are the numbers I posted yesterday in chart form; note that “federal taxes paid” includes not only income taxes but social-insurance taxes, corporate taxes (which, after all, are ultimately paid by individuals) and excise taxes for 2009, the most recent year the CBO has examined:
So, even when we include the payroll taxes for Social Security and Medicare, which disproportionately hit lower-income workers, the U.S. tax code is already sharply progressive. What liberal/progressivists have yet to tell us is exactly how much more progressive they think it should be.
Well, sort of. We do have an idea of what they think it should be, at least for starters, in the form of Obama’s raise-taxes-on-the-rich proposal. Part of his usual argument for raising taxes on the rich is that we’ve been going down the wrong path for the past three decades — which is shorthand for: since Ronald Reagan was elected and sharply lowered marginal income-tax rates.
Conveniently, the CBO’s report includes data going all the way back to 1979. So, how did things change over the course of 30 years?
One of the ways the Organization for Economic Cooperation and Development (or OECD, the Paris-based club of industrialized nations) measures tax-code progressivity is by calculating the ratio of the tax burden to income earned for each income group. For example, if one quintile earns 20% of the income and pays 10% of the taxes, its ratio would be 10/20, or 0.50. The higher the ratios for the upper-income groups, and the lower the ratios for the lower-income groups, the more progressive the tax code. By this measure, the OECD has determined the U.S. has the most progressive tax code in the industrialized world.
When we compare the 2009 ratios for these income groups to the 1979 ratios, this is what we get:
So, by this measure used by the OECD, the U.S. tax code has gotten significantly more progressive, from top to bottom, since the days of Jimmy Carter.
For another comparison, I looked at 2000 (the peak of the Clinton years) and 2007 (the peak of the Bush years). Despite the Bush tax cuts, the ratios for 2007 were almost identical to those of 2000: just three-thousandths of a point less progressive for the top 1%, and more progressive for all the other income groups.
If there is a problem with income inequality in this country, it’s not the tax code’s fault.
– By Kyle Wingfield
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
565 comments Add your comment
Doug B
July 11th, 2012
9:50 am
Even if, as you say, we “all pay” the corporate taxes, the way you’ve organized the data, corporate taxes will go largely to the top quintile. All the people paying those taxes are not in the top quintile.
Ernest T Bass
July 11th, 2012
9:51 am
Given the discussion about President Obama’s desire to raise taxes on “the rich” — i.e., families earning more than $250,000 a year
As a single mom working 2 jobs if 250,000 is “rich”
God the arrogance of some people.
Aquagirl
July 11th, 2012
9:54 am
If there is a problem of income inequality, and there is a problem of this inequality increasing, what does Kyle suggest to do about it, other than using the progressivity of the tax code?
Let them eat cake.
fair and balanced
July 11th, 2012
9:55 am
Red Herring ::
“”"”good job kyle… liberals will never admit to these facts however….they want the free stuff. we have reached the point that they can outvote us by pandering for votes via not enforcing laws, suing states that try to enforce them, etc”"”"
Lets see the ultraliberal George W gave seniors on Medicare free drugs with no funding source and Medicare Advantage that included free gym memberships and other goodies. Think seniors will give up this ultra liberal give away for the sake of the US budget under Romney or the Tyan budget???
Also a liberal governor of Massachussetts got together with Ted Kennedy to bilk Medicaid out of 8 and half billion dollars of waivers for excess payments to Massachusetts so it it could provide free health care to all who could not afford private insurance. I am sure if elected Romney will end that give away.
A certain Republican icon who was president in 1986 passed legislation to provide free emergency room care to all including illegals with no funding source. I am sure Republicans are ready to cut that along with nonpublic funded Obamacare.
DannyX
July 11th, 2012
9:55 am
Are you ready to rumble?
In one corner we have a candidate that wants to extend the middle class tax cuts only.
In the other corner you have a candidate that wants more tax cuts for the rich.
This will be an easy knockout, guess which candidate wins!
stands for decibels
July 11th, 2012
9:55 am
nitpicky point, but I feel I gotta make it:
President Obama’s desire to raise taxes on “the rich”
I see many cites to “the rich” in news/opinion pieces, generally from the right.
I have not yet seen any specific stump speeches where President Obama actually uses that phrase to describe people earning above 250K per year.
Just seems kind of dishonest to put “the rich” in quotes, if the President isn’t actually calling this demographic by that (apparently slanderous?) name.
(Then again, maybe the President *is* saying this, and I’m just missing it, in which case I’ll gladly play Emily Litella here. But what I usually hear is “the wealthiest Americans”, or suchlike.)
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
9:56 am
“And if you vote Republican, you are Republican. You are Republican, Tiberius.”
How many times must you vote in a given election for a Republican to be considered one, Inciteful? Let’s say, out of 20 races on the ballot, how many Republican votes makes me a Republican?
Finn McCool (The System isn't Broken; It's Fixed)
July 11th, 2012
9:57 am
Ok, I’m off to convince illegal immigrants they should risk incarceration and deportation so they can do something that will have zero positive influence on their lives: vote!
Ray
July 11th, 2012
9:58 am
Looking at “pre-tax” dollars to total taxes paid, hides the disproportionate amount of tax benefits the top 1% reaps because the tax code is specifically written to their great advantage (ask Jack Abramoff how it was done). Gross income, before deductions would have been more revealing, and provide a truer income to tax ratio.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
9:59 am
fair and balanced, why don’t you approach 2012’s problems with CURRENT points.
All you’re doing is providing more deflection by not even discussing what CURRENT politicians have for solutions to CURRENT problems.
We live in the present, fair and balanced. You should try it, too.
Finn McCool (The System isn't Broken; It's Fixed)
July 11th, 2012
10:00 am
oh, and another point to go with what SFD said: Making $250k a year doesn’t make you rich or wealthy. Making $1 million a year doesn’t make you rich or wealthy. Remember these little pointers:
If you hire a lawn service to cut your lawn you are not wealthy. IF you employ a full-time gardener, you are probably “wealthy.”
If you cook your own meals or eat out every day, you probably aren’t wealthy, IF you employ a full-time chef, you are probably “wealthy.”
If you frequently hire a maid service you are not wealthy. If you employ a full-time “house staff”, you are probably wealthy.
If you drive your kids to sports practices you sure aren’t wealthy, IF you employ a full-time chauffeur, you probably are wealthy.
Jefferson
July 11th, 2012
10:00 am
Not completely true, AND you know it.
Uh Oh
July 11th, 2012
10:02 am
Tiberius
It is just a general percentage. No need to spin the question.
Is it 50%, 10%, 87%?
I’m just curious. You like anyone else is welcome to call yourself what you like even if you just so happen to vote 90% plus for Republicans, if that is the case
carlosgvv
July 11th, 2012
10:02 am
Kyle, the rich have access to legal tax dodges, which the middle class and poor do not.
You forgot to mention this. I guess it just slipped your mind, right?
AmVet
July 11th, 2012
10:03 am
There are an innumerable number of reasons to vote against Flip Romney but these are the five words that sunk his campaign before he even left the dock:
Corporations are people, my friend.
Only the most servile of Americans are not repulsed by this sovereignty-sellout.
He is unfit to lead…
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:03 am
“If Tiberius isn’t a Republican then that means he approaches every voting booth with plans to vote for the best candidate no matter the party.
Is that true Tiberious?”
ABSOLUTELY, Finn! You finally get me!
Took you a while.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:05 am
Uh Oh, not that it’s any of your business, but I vote for the Republican about 20%-30% of the time.
DannyX
July 11th, 2012
10:05 am
“it’s really American to avoid paying taxes, legally,” Sen. Lindsey Graham (Republican)
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:06 am
“Corporations are people, my friend.”
Supreme Court says so.
Next!
Steven
July 11th, 2012
10:07 am
Steven–In case your chart-reading skills are a little rusty, the first two entries, i.e. the top 1% and the top 10%, are repeated in the “Highest Quintile” entry. Since these two groups are counted twice, the total doesn’t = 100%.
Remove the first two entries and the first column totals 101.5 and the second column totals 99.3
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:08 am
Ever heard of “rounding” in math class, Steven?
Geez!
AmVet
July 11th, 2012
10:11 am
And we all know that the United States Supreme Court is utterly and forever infallible.
(Except that traitorous Chief Justice! LOL)
Grow a spine and help us reclaim OUR sovereignty back from the corporate owned territory called Washington DC. Or better yet, just keep cowering and get out of the way.
Occupy that.
I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. ~Thomas Jefferson
The man was obviously no neocon…
Uh Oh
July 11th, 2012
10:12 am
“Uh Oh, not that it’s any of your business,”
People with faux alpha personas are so funny.
Thomas Heyward Jr.
July 11th, 2012
10:12 am
Look at your dwindling tax-collections.
Viva la Revolution—————————————
‘Every election season America is presented with a series of false choices. Should we launch preemptive wars against this country or that one? Should every American neighborhood live under this social policy or that one? Should a third of our income be taken away by an income tax or a national sales tax? The shared assumptions behind these questions, on the other hand, are never cast in doubt, or even raised. And anyone who wants to ask different questions or who suggests that the questions as framed exclude attractive, humane alternatives, is ipso facto excluded from mainstream discussion.
And so every four years we are treated to the same tired, predictable routine: two candidates with few disagreements on fundamentals pretend that they represent dramatically different philosophies of government.
.
Ron Paul
Jefferson
July 11th, 2012
10:14 am
If I had tons of money, I would keep it in AMERICAN banks because that’s what a good AMERICAN would do. Tax avoidance at Romney’s level, where you will NEVER spend all the money they have is just plain greedy, AND that is a character flaw.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:15 am
The point you MISS about Jefferson, AmVet, (and why am I NOT surprised about THAT) is that Jefferson wouldn’t have ever DARED to use the power of Government to accomplish that statement, but rather, the combined power of the INDIVIDUAL, always striving to succeed ON THEIR OWN to do so.
Context is so important when discussing concepts, rather than cherry-picking quotes.
John Galt
July 11th, 2012
10:16 am
The tax spending is progressive as well.
Most of the benefits are going to those that are not contributing.
Uh Oh
July 11th, 2012
10:17 am
Was Jefferson a nice guy when you met him?
fair and balanced
July 11th, 2012
10:17 am
Tiberius- Fine tell me what your man Romney and the Ryan Budget plan to cut on each of the three current budget busters I mentioned- . None of them are part of Obamacare now that SCOTUS overturned the mandatory Mdicaid increase in Obamacare
Total cost to the taxpayers of these items could be currently over l trillion dollars for next ten years-your solution??????????????????????????????????????????????Be specific with cites so I can be assured voting for Romney will end these give aways.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:19 am
“where you will NEVER spend all the money they have ”
And you know this – how – jefferson?
Do you know Romney’s plan for his wealth when he passes away?
Please, jefferson. Enlighten us as to Mitt Romney’s estate planning.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
10:19 am
JDW
We now have your definition of what fairness in the tax code is, the problem is that I don’t think that is fair. I bet Amvet, MarkV, Tiberius, Stands, would all have their own definition of fair. I think Conservatives are closer to a consensus when they say they want lower rates, less deductions and exemptions, and a flat rate.
Don’t think you libs would ever agree with how much blood is necessary to squeeze from the turnip.
The sad thing is that if we let you decide, that still does not fix the problem. Sure, the CEO’s are wealthy and often flaunt their wealth, but stripping them of all their income, does little to solve the deficit problem and nothing to repay the debt. The only way you get there is through massive decreases in government spending. There is just not that much income combined in the accounts of the wealthy to matter that much. I have not heard Oblamer talk about his austerity measures, just his wealth transfer fantasies.
Common Sense
July 11th, 2012
10:21 am
“If I had tons of money, I would keep it in AMERICAN banks because that’s what a good AMERICAN would do. Tax avoidance at Romney’s level, where you will NEVER spend all the money they have is just plain greedy, AND that is a character flaw.”
Maybe that is what you would do.
But you would not have tons of momey for long.
Inflation would whittle away at your principle, leaving you reduced purchasing power every year. On top of that you will be asked to pay taxes on the interest you earned which does not even match the rate of inflation.
Then, the bamk will take those funds you have given them and make poor decisions on who should get the loans, becasuse it was so easy to acquire the money to make the loan in the first place. They will not worry about defaults because the government will be there to step in and make things whole.
Then your taxes will climb higher as you are the one with the money, so you will be the one to make folks whole, as the government produces nothing.
But at least you will be able to look down upon others, who tried to do more with their assets than lend them to folks who make bad choices.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:21 am
“Fine tell me what your man Romney and the Ryan Budget plan to cut on each of the three current budget busters I mentioned”
I’m sorry. What three “budget busters”?
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:23 am
Gee, and I was so hoping for Inciteful and Uh Oh to apologize to me after falsely claiming I was a Republican due to my voting patterns.
I’m crushed . . .
How Inciteful Is That!
July 11th, 2012
10:24 am
Tiberius – pulling the tail of the left AND right when needed
July 11th, 2012
9:33 am
Inciteful, I will refer you to this post, specifically points 1, 4 and 7
http://blogs.ajc.com/kyle-wingfield/2012/07/10/heres-the-deal/
Up your game, son.
You mean like this one, Tiberius:
Tiberius – pulling the tail of the left AND right when needed
July 11th, 2012
8:50 am
Wow! You’ve got the libs on the run with this article, Kyle! Good one!
40 comments since I started to form this post, and of the few libs who dared to come on board, Inciteful posts pure nonsense and deflection, AmVet posts his usual “plutocracy” one-note, and none of the rest have a single, solitary rebuttal to your column.
Game, Set, Match.
AmVet
July 11th, 2012
10:25 am
The point you MISS about Jefferson, AmVet, (and why am I NOT surprised about THAT) is that Jefferson wouldn’t have ever DARED to use the power of Government to accomplish that statement, but rather, the combined power of the INDIVIDUAL, always striving to succeed ON THEIR OWN to do so.
An on the spot, made up out of thin air, unsubstantiated theory. And as compelling and convincing as blaming sunspots to “explain” climate change.
And why you NEVER show your work. Not the first quote – from him or anyone else about him – or otherwise verifiable piece of evidence, data, fact, etc…
Your opinions are not facts.
That you side with the monied corporations over our government, that you would like to crush (or at least drown in bathtub) is the key point…
Long live the United Corporations of America!
How Inciteful Is That!
July 11th, 2012
10:26 am
Oh, did I mention that I’m a conservative.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
10:29 am
AmVet, you come on he every day and blast Romney, but you claim not to like the Flip-Flopper in Chief either, so just to add a little humor to this blog, please tell us for whom you intend to vote.
I don’t think, Unsafe at Any Speed, is running this time. Is it Gary Johnson, Cynthia McKinney, or are you writing in someone?
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:29 am
Uh Oh, to get a true sense of who Thomas Jefferson was and what he actually believed in, I suggest you read the Federalist Papers in it’s entirety, as I have multiple times.
There is NOTHING in ANY of his writings to suggest that he favored the power of Government over the power of the Individual, nor that he would use Government for anything other than it’s Constitutional intent.
To cherry-pick a quote from him and suggest that he would is not only dishonest, but it is the modus operandi of the left when they have NO real argument for the topic at hand.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
10:30 am
He who governs least, governs best. Thomas Jefferson
Aquagirl
July 11th, 2012
10:33 am
The tax spending is progressive as well. Most of the benefits are going to those that are not contributing.
Yeah, I’d like to kick some of the bright red states like Mississippi off the federal dole but they keep electing Republicans expert in clamping harder on the welfare teat.
Until then the people in Massachusetts and New York will just have to endure the leeches.
Uh Oh
July 11th, 2012
10:33 am
Off topic: House is voting today for the 31st time to repeal Obamacare. The 1st 30 times were votes to repeal part or all of the new law that was ruled constitutional a few weeks ago.
What a waste of time, but if it riles the base and gets talk radio going as well as a few columns written, what the heck.
Uh Oh
July 11th, 2012
10:34 am
And like I said was he a nice guy when you met him?
He couldn’t have been to much for the individual making it on their own, seeing that part of his wealth was supplemented by slave labor, but I digress.
1961_Xer
July 11th, 2012
10:35 am
What liberal/progressivists have yet to tell us is exactly how much more progressive they think it should be.
They won’t, but I will: From each according to his ability, to each according to his needs.
In short: Progressives want to take all your money, and give you back what they determine you need.
Uh Oh
July 11th, 2012
10:36 am
Which states are upside down in terms of the Fed tax dollars they send to DC vs the funds they receive and which ones are right side up?
fair and balanced
July 11th, 2012
10:38 am
See that is the problem- any health care solution passed by a Republican cannot possibly be seen as a budget buster. Now if Obama agreed to give free drugs to the elderly and gym membersjps to get reelected the right would be going beserk. If he agreed to pass eight and half billion dollars of excess and unreimbursed Medicaid to fund Romneycare, SCOTUS would tell him its unconstitutional and if he gave free emergency room care to illegals he would never get past Congress and never reelected.
You made my point Tiberius -nonissue if Republicans give away free health care with no source of funding. Don;t even expect Romney to solve the problem caused by other Republicans and himself as governor. I am glad there are more important issues.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
10:38 am
“Not the first quote – from him or anyone else about him – or otherwise verifiable piece of evidence, data, fact, etc…”
I suggest you read the collective works known as The Federalist Papers, AmVet.
YOU made a statement about Thomas Jefferson completely in opposition to EVERYTHING known about the man, and you expect us to suddenly believe YOUR OPINION?
When the FACTS have been available for all to see (except, apparently, for you) for over 200 years?
If YOU wish to disparage the memory of one of the greatest Americans who ever lived, and who set this nation on a course that STILL provides YOU the ability to spout unfounded nonsense on a daily basis without fear of reprisal, I suggest you find something more than ONE STINKIN’ QUOTE without any context.
The ability of liberals to lie regarding some of our greatest forefathers in order to make false political points is unparallelled in human history.
JohnnyReb
July 11th, 2012
10:38 am
Liberals don’t understand.
They think there is something they can state, print, put on TV, lie about, promise that won’t come true, etc. that will somehow sway voters not to go for Romney. There is not.
The voting will be against Obama no matter what comes out, true or not about Romney.
Liberals think Obama tied or ahead of Romney. They will tell you the polls show that. What they won’t tell you, for example, is the latest Washington Post poll showing a tie was the result of polling 9% more Democrats than Republicans. In other words, Romney is up by 9 points.
AmVet
July 11th, 2012
10:39 am
Flip-Flopper in Chief?
Whoa, cowboy! Hold your horses! He hasn’t been elected yet!
He still has to get nominated at the upcoming All White Circus in Tampa.
AND he still needs to nominate Exxon-Mobil Corporation as his running mate.
So go ahead and vote for Mitt Robme because he has an R after his name. That is your destiny…
ragnar danneskjold
July 11th, 2012
10:39 am
To the extent that our host argues that the president lacks economic competence, I do not challenge. The tone of the essay suggests that a “progressive income tax” is good or desirable, and I disagree with that suggestion.
The “progressive” element of the income tax is the primary cause for the nearly-incredible complexity of the code – due to the multiplicity of rules necessary to keep people from employing the infinite means of “shifting” income to those with lower marginal rates. The essay does not invite competing essays on tax theory, and I suspect we have all hashed out our thoughts on alternative tax bases anyway.