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
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
July 11th, 2012
1:57 pm
14 Billion for dead people doesn’t concern you, gitmo?
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
2:00 pm
HD
That’s a holdover from the 19th century when land was the lion’s share of most people’s wealth.
We need to look at fixing that, as well.
I agree, being a landholder, but the only way government ever fixes an inequity is by putting taxes on both. Taxes never go away, just go up!
Thulsa Doom
July 11th, 2012
2:00 pm
Fred,
Welcome to the adult table.
JDW
July 11th, 2012
2:01 pm
@Tiberius…to answer your first question “how many over $10 million” without stopping to count 15 to 20.
As for your second question
“how many of those negotiations proceeded for MONTHS on less substantive issues being discussed back and forth, when suddenly, a great big change in the proposal was dropped on the table for consideration with just days to go before the negotiating deadline.”
On deals of that size it has happened 4 times…in none of those cases did one party simply walk and in three the deal got done after more work. In the last one it got done 2 years later.
Point is had the Repugs been serious about negotiating they would not have just walked even if, and I am not sure it is true, the revenue side of the equation got bumped by $400 billion on a $4 trillion deal.
md
July 11th, 2012
2:01 pm
“To say corp taxes are not paid by corps is double speak and a lie in fact.”
No, it’s basic math.
Corps set their prices for goods/services based on the cost of that good/service. “Tax” on the books of a corp is merely another expense……..just like the light bill or the water bill……a corp then sets a price to ensure there is enough in the price to cover the cost of doing business……….
Sure, they pay a “tax” to uncle sugar, but you gave it to them when you bought the product.
Bruno
July 11th, 2012
2:01 pm
The fact that the upper quintile is paying a greater share of the tax burden seems irrelevent when you consider they are still paying a lower rate of tax on their income.
DF–How do you come to that conclusion that the upper quintile is paying a lower rate based on the numbers in the chart?? If they pay 67.9 % of the total taxes collected while earning 50.8% of all income, then obviously their overall taxation rate is higher than the other 4/5 of the population.
Doom must have gotten his instructions mixed up earlier. I told him to get some of the more intelligent Lib bloggers over here. (j/k, friend)
Don Abernethy
July 11th, 2012
2:02 pm
Comrade Obama is trying to use class warfare to get votes. There are a lot more voters on the lower end than the upper end of earnings in this country. He does not care who pays taxes. All he wants is votes.
Hillbilly D
July 11th, 2012
2:02 pm
Rafe
A lot of truth in that but if they are taxing one group and not another, one group will howl and the other remain quiet. If they tax both groups, there’s always the chance that both groups might howl. Sometimes, though not often, howling can bring a little relief.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:03 pm
“To say corp taxes are not paid by corps is double speak and a lie in fact.”
Really, Jefferson? Prove it.
Make the case that those evil corporations you libs are always railing about are now so suddenly caring and responsible citizens who VOLUNTARILY reduce the money they take in just to be able to pay some of that to the Federal government.
They’re either greedy b@st@rds or wonderful, caring corporate entities, Jefferson. There is NO in between.
Anybody that says that businesses don’t bake ALL their costs, including taxes, into the price of their products have never run a company of their own, or have never been close enough to the operations to know what is going on.
AmVet
July 11th, 2012
2:06 pm
To say corp taxes are not paid by corps is double speak and a lie in fact.
Pure Fox News insanity and gibberish.
You see, I don’t pay taxes either. No one does!
We send them down the economic stream to the people who would otherwise earn our money for products and services.
In this regard, we pass those taxes onto them. And they pass them on to someone else and voila!
Republican Utopia!!!
Nobody pays taxes!!!
Individuals are merely the collectors and re-distributors!!!
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:07 pm
“On deals of that size it has happened 4 times…in none of those cases did one party simply walk and in three the deal got done after more work. In the last one it got done 2 years later.”
Thanks for proving my point, JDW.
In case you missed it, we didn’t have years to get it done.
Two weeks, JDW. That’s all they had when Obama dumped his steaming pile on the table.
Don’t even try to make the case Obama’s proposal was serious at that late stage of the game.
You can’t.
Dusty
July 11th, 2012
2:07 pm
Honest, you guys rather compare figures than eat. I should say numbers I suppose. But one learns a lot here such as “the deceased are getting unemployment benefits”. Well, they aren’t working, That’s for sure. Pearls of wisdom, right here on the blog.
Oh, thanks, Kyle. I forgot the “jailhouse rules for rambunctious rowdies” last night. No problem. The All Stars were playing.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:08 pm
More AmVet nonsense.
Got a serious point to make?
Jefferson
July 11th, 2012
2:08 pm
If you don’t know a lie when it is told to you, it is no wonder you would support the GOP.
Don't Forget
July 11th, 2012
2:08 pm
As has been documented numerous times, single parenthood is a net negative for both the parent and the child across the board. In the “old days”, there was a sense of shame associated with it.
While I agree with the social advantages of two parent households I don’t think it explains the current economic issues. In 1976, a mere 33% of two parent households had both parents working at least part time. That number is even lower for the 60’s. The reason is that wages were adequate in that time period for a single earner to meet the financial needs of the family. More often than not, this is no longer the case.
Gimme Gimme Gimme
July 11th, 2012
2:09 pm
To best way to deal with AmVet is to just ignore him.
Bruno
July 11th, 2012
2:09 pm
DF–In case you missed it, here is my take on the Higgs Boson “discovery” in response by a comment from Dusty. Let me know what you think:
http://blogs.ajc.com/kyle-wingfield/2012/07/10/2012-tuesday-obama-gives-tax-the-rich-one-more-heave/?cp=7#comment-126188
Long live vitalism!!
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
2:10 pm
AmVet @2:06 pure jibberish, BTW, you never told us who you support in this Presidential election. We have heard a great deal about who you oppose.
JDW
July 11th, 2012
2:11 pm
@Tiberius…”Thanks for proving my point, JDW.”
WOW you really are delusional…the point is that if the Repugs had wanted a deal they would have kept working…not gone home and pouted.
The real dynamic was the Tea Partiers refusal to proceed. Boehner just needed an excuse to walk.
md
July 11th, 2012
2:13 pm
“If you don’t know a lie when it is told to you, it is no wonder you would support the GOP.”
I just explained it to you……if you still have issues, refute the math. it’s a simple equation:
income – expenses = profit
Tax falls under the second one if you need a hand.
Don't Forget
July 11th, 2012
2:14 pm
DF–How do you come to that conclusion that the upper quintile is paying a lower rate based on the numbers in the chart??
Simple, Kyle’s numbers are based on percentage of tax revenue for the federal government. I was referring to individual tax rate (percentage) of income. Just look at top marginal rates over time and you’ll see what I’m talking about. For example, my father was successful enough to pay a 50% rate on part of his income. That is well above the top marginal rate paid by anyone today.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:14 pm
“If you don’t know a lie when it is told to you, it is no wonder you would support the GOP.”
I’d ask you to debunk anything I’ve stated with alternate knowledge of your own, Jefferson, but that would a wasted effort, wouldn’t it?
Maybe you could tell us how many corporations you’ve run? Companies you’ve owned? Product pricing you’ve been in charge of?
Any of those things, Jefferson?
No?
Nothing to back up your disagreement with my contention?
I’m shocked.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
2:15 pm
Don’t Forget
The reason is that wages were adequate in that time period for a single earner to meet the financial needs of the family. More often than not, this is no longer the case.
True, but also tax rates were lower and we did not have the Gov competing for goods and services, as they do now which meant that cost of living was lower, back then.
Thulsa Doom
July 11th, 2012
2:15 pm
“If you don’t know a lie when it is told to you, it is no wonder you would support the GOP.”
Jefferson,
Can you kindly point out the specific lie to which you refer? Please be specific sir.
Fred ™
July 11th, 2012
2:15 pm
md
July 11th, 2012
1:36 pm
“Wow, and I didn’t even see Kyle’s mouth move. The “source” isn’t the problem md. I’m sure it’s impeccable. It’s the logic that is faulty though I’m not at all surprised that you fail to see that.”
Typical insulting Fred fashion….too funny.
He basically compared data from two periods of time Fred……not much logic to it.
++++++++++++++++++++++++++++++++++++++++++
I knew it was over your head md. I won’t explain what you can’t understand. He’s just copying Boortz’s old tired ‘The rich pay X percent of the taxes.”
Really? You need a graph for that?
Let’s pretend I made 230,000 last yeat and paid $21,000 in taxes.
Let’s pretend YOU made $50000 and paid the current married filing jointly tax rate on that amount (15%) for a total of $7500.
So between you and I, we paid $28,500 in taxes. Oh horrors I paid 74% of the taxes collect from you and I. Yet you paid 15% and I paid just barely 9%.
Also what “percentage” does my $230000 put my income in and what “percentage” does your $50,000 put you in?
While on the surface his little chart shows that the tax code is “really sticking it to the rich peoples” in actuality running the real numbers shows they are coasting.
But you keep believing what you believe. I’m loving my 9% tax bracket and am looking forward to having it reduced even lower. I THINK if I add my daughters private school, I can get it reduced to paying less than 2% for income tax. Sweet.
But I’m not going to lie and call it “fair” or try to even pretend I’m pulling my weight. The tax code is designed to help the wealthy pay a lower percentage.
Oh and md? I NEVER write myself a paycheck. if I did that, I would have to pay SS and other payroll taxes. I just write a “dividend” check every once and a while.
Life is sweet on top. Thanks for keeping it sweet for me. You and Kyle both. But don’t tell me it’s honest and truthful that there little “percentage of the taxes the wealthy pay” scam chart you got going on. I KNOW better.
AmVet
July 11th, 2012
2:16 pm
Tib, You’re a liar, and the worst thing is, you know you’re a liar, but you don’t even care. (Huge grin.)
B, the fuddy duddy Rafe voted against music here, so I linked AC/DC’s Rock and Roll Ain’t Noise Pollution for his listening pleasure!
Dance, Rafe. Dance.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:18 pm
“the point is that if the Repugs had wanted a deal they would have kept working”
I suspect your negotiating skills aren’t very good, JDW.
If you have a steaming pile dropped on your table with a hard two week deadline to go, you have no choice but to walk away, as your opponent isn’t serious about making any deal.
Two weeks, JDW.
Two weeks to potential default.
You walk.
Because the President wasn’t serious.
He was just playing politics with the nation’s credit rating.
fair and balanced
July 11th, 2012
2:18 pm
Kyle on social security and medicare taxes:
“you pay the tax now to fund retirement and health benefits for today’s seniors, with the implicit promise that younger people will do likewise when you retire — but then again, liberals typically don’t like to acknowledge that, either.”
If that is the case which I do not disagree why would any president and party give seniors free Medicare drugs and gym memberships unless there is an increased source of funding within those two programs?
And why are you on the antiObamacare increase in taxes to fund that Republican created deficit?
Hillbilly D
July 11th, 2012
2:18 pm
In 1976, a mere 33% of two parent households had both parents working at least part time. That number is even lower for the 60’s. The reason is that wages were adequate in that time period for a single earner to meet the financial needs of the family.
That’s an interesting point and it’s true. It brought about an unintended consequence, though. When more women started to work outside the home, whether to bring in more income or because they wanted a career, or whatever, that brought a lot more people into the job market. Supply and demand took over and that created a downward pressure on wages. That tended to snowball over time. Real wages have been flat for about the last 40 years and prices have continued to increase, more in some periods than in others. So as the wages flattened and the prices rose, it became more of a necessity and less of an option for both people in the house to work. So the tail is basically wagging the dog.
That doesn’t factor in all the other problems that have come along with it. We’re in our second or third generation of “latch-key kids” and all the inherent problems that come along with that.
What’s the answer? Damned if I know.
AmVet
July 11th, 2012
2:19 pm
Can you kindly point out the specific lie to which you refer? Please be specific sir.
Doomy, I have really, really bad news.
Dad has spoken on the matter and this is what he said:
The part about “liar,” however, I see differently. If two people are having an exchange and one accuses the other one of lying, that relates directly to the debate. The accused is of course free to demonstrate why the comment in question was not a lie. While I think it preferable to say the comment was a lie, or to say the person was lying, I am not inclined to treat “you’re a liar” differently.
i.e., inexplicably he puts the onus on the person called a liar to prove that they are not. Instead of the other way around!!! In all adult discourse that I have ever been party to, I have never seen this.
Madness, but what the hell. Let the fun begin!
Dusty
July 11th, 2012
2:20 pm
Dear HD,
You said that sometimes people wonder how your mind works. Your mind works better than a fine watch. Obviously! The only time I wondered was when I believe you said you lived next door to 19,000 chickens. Were you “crowing” a bit or was that just a “cluck” from the hen house? Whatever. I like mine fried.
Gimme Gimme Gimme
July 11th, 2012
2:21 pm
“The tax code is designed to help the wealthy pay a lower percentage.”
The tax code is designed to use social engineering to alter peoples behavior. If your statement was true then Liberal’s wouldn’t be so opposed to a Flat tax.
JMKO
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:22 pm
Fred needs a lesson in the difference between an income tax rate, and the percentage of total taxes paid.
Kyle is not making the case about income tax rates, Fred, but total taxes paid. As such, neither his chart nor his conclusions are lies.
Try to discuss apples to apples, if you would, please.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
2:27 pm
AmVet,
Music on a political blog makes about as much sense, as people who complain constantly about government policy, but vote for someone who has no chance of ever influencing anything.
Hillbilly D
July 11th, 2012
2:29 pm
Dusty
Well, that was actually 80,000 broilers but next door for me is several hundred yards (more in the case of the chickens; I’ve got more elbow room on that side).I wasn’t crowing, just giving the facts ma’am.
As to my mind, even people I’ve known all my life just shake their head in wonder, sometimes. (everybody can put their own interpretation on what the shaking head means).
Fred ™
July 11th, 2012
2:29 pm
I see it’s over YOUR head as well Tiberius. Thanks for supporting my lifestyle. But I do feel honor bound to tell you, the Emperor really isn’t wearing any clothes. You’ll take off the rose colored glasses one day and understand that. Or not. PT Barnum was only correct to a point. Joseph Goebbels seems to have taken it further and FOX and talk radio have shown that Dr. Goebbels was correct. You can fool MANY folks all the time, not just a few. Repeat a lie long enough and they will not only believe it, but defend it with their lives.
But please, keep it up. It’s a good time to be rich……….
http://www.youtube.com/watch?v=KuMQjKiaDTg
fair and balanced
July 11th, 2012
2:31 pm
From Michelle Malkin an obvious liberal who hates Bush:
“”"”"”"”"”President Bush promised Congress that his Medicare prescription drug benefit would cost no more than $400 billion over 10 years, but once the legislation was enacted, federal actuaries boosted the estimate to $534 billion. Now, Bush administration projections indicate that the cost could be considerably higher.
According to internal White House budget office estimates of the long-term cost of Medicare, spending related to the new drug benefit could increase by $42 billion over the coming decade.
The revised figure appears in a chart prepared during this summer’s “mid-session review” by the Office of Management and Budget and Medicare actuaries. The document provides a detailed breakdown of an extra $176 billion in Medicare spending projected for the next 10 years. The chart, provided to The Washington Post late last week, identifies $42 billion of that increase “as related to MMA,” the initials of the Medicare Modernization Act, the new prescription drug law.
Several budget analysts said the chart indicates that the price tag of the president’s new drug program could total as much as $576 billion over 10 years…”"”
That was in 2005. Estimates now for ten years: $1.2 trillion dollars. Hhow is it going to be funded?
The tax fairy?
Interested Observer
July 11th, 2012
2:32 pm
RE: “You can google ‘libtard’ if necessary, and will instantly understand its relevance. Unless you’re a libtard.”
Wouldn’t a post like this be a clear violation of the rules? Given the recent emphasis on civility, how is it that posts like these are allowed to stand and those who make them are allowed to participate?
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:34 pm
Fred, I don’t care about YOUR lifestyle (or you, really).
Why do you care about anyone else’s, so long as you don’t try to take from me to help others?
Fred ™
July 11th, 2012
2:35 pm
Tiberius – pulling the tail of the left AND right when needed
July 11th, 2012
1:56 pm
“Show me the “complaint” Tiberius.”
This is too easy, Fred.
Fred ™
July 11th, 2012
1:22 pm
Does the inherent dishonesty of your “chart” ever bother you Kyle?”
++++++++++++++++++++++
Asking a question is a “complaint” to you? Really? Screw English definitions and grammar rules, and rules of logic. Tiberius has spoken. Arbitrarily he calls something a ‘complaint” so it is.
I guess on June 30th had I noted that it was the hottest day in Atlanta’s history that would be “complaining too? Really?
Wow.
JDW
July 11th, 2012
2:36 pm
@Tiberius…”I suspect your negotiating skills aren’t very good, JDW”
Now you are really humorous. Please don’t tell my clients they pay me a very nice rate to deliver a variety of consulting programs among which is the facilitation of executive level negotiation training.
Then again I suspect they are better qualified to make that judgment and they keep on paying me.
Lil' Barry Bailout (Revised Downward)
July 11th, 2012
2:36 pm
getalife: “When do we focus on jobs”
———–
Now THAT was laugh-out-loud funny!
Answer: Right after Obozo gets done wrecking our health care system and expanding the entitlement state to cover 51% of voters.
Rafe Hollister, suffering through Oblamer's ineptocracy
July 11th, 2012
2:37 pm
Professor Walter E. Williams made an excellent point the other day regarding subsidies for the elderly. He said why should a kid earning minimum wage, with no health insurance, with $100,000 in student loans, a broken down car, a rat infested apartment, be paying part of his wages to subsidize an elderly lady, who has a paid for mini-mansion, medicare, investments, a new car, a beauty shop appointment each week, the latest in electronics, vacations in Europe, part of his wages.
He said that is why he never accepts the senior discount, he feels like it should go to the struggling working people rather than the seniors. Made me stop and think maybe we have an upside down country for sure.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:37 pm
fair and balanced, why do you insist on focusing on the failures of the past, when the goal is to solve the problems of today?
We get it. You don’t like Bush or the Republicans of the 2000’s
Move into the present with the rest of reality.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:40 pm
“Asking a question is a “complaint” to you?”
No, calling Kyle’s chart dishonest, without any supporting facts, is a complaint.
In EVERY dictionary, Fred.
Especially when you further post that nonsense without knowing the point Kyle was making.
JDW
July 11th, 2012
2:42 pm
@Tiberius…”If you have a steaming pile dropped on your table with a hard two week deadline to go, you have no choice but to walk away, as your opponent isn’t serious about making any deal.”
BTW..the tactic is called “hard bargaining”. The point is twofold first, to establish the lower end of bargaining range and second confirm that the other party really wants to negotiate.
Only those that really don’t want a deal choose to end the process at that point.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:43 pm
I accept your surrender, JDW.
Two weeks.
Steaming pile on the table.
Two weeks to default.
Make the case that the person dropping the steaming pile with a hard deadline of two weeks is serious about negotiating.
You haven’t. Because you can’t. The truly sad part is, if you are what you say you are, that you can’t even admit the reality of the situation in order to avoid being proved wrong – again.
Fred ™
July 11th, 2012
2:43 pm
Tiberius – pulling the tail of the left AND right when needed
July 11th, 2012
2:34 pm
Fred, I don’t care about YOUR lifestyle (or you, really).
Why do you care about anyone else’s, so long as you don’t try to take from me to help others?
+++++++++++++++++++++++
Come on now Tiberius. Stick to the topic and the words i SAY. I know it’s hard for you as you think hyperbole is logic but……………..
I have never said I give a fat rat’s butt about your life style or any one elses. I DID state that the tax system is slanted towards us rich people and that the little chart Kyle bases his whole premises on is disingenuous.
Stick to the topic son. I told you earlier you wouldn’t be able to understand it. Don’t be obfuscating and changing the subject because I was right. Correct on both points actually, your lack of understanding AND the chart.
Now shoo. I’m done with you. You have shown you lack the ability for logical debate. perhaps later Bruno will come on and show me some fallacy in my thought but you have so far shown no ability to do so. I’ll check back in later. Now I have to cook.
Have a nice day and remember Tiberius, I can EXPLAIN it to you but I can’t UNDERSTAND it for you.
Try thinking for yourself. You’ll find it not only fun but also exhilarating almost to the point of intoxicating. Once you free your mind on one thing you’ll find yourself trying to do it on other issues. Before you know it you’ll be a free thinker and be able to laugh at the mindless fanatics on both sides of the aisle. You’ll even be able to debate on issues emotion free just using facts and thought alone. I know that’s a bit down the road for you but I think you might have the potential.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:45 pm
You’d play chicken with a national default, JDW?
Politics. Plain and simple.
Tiberius - pulling the tail of the left AND right when needed
July 11th, 2012
2:47 pm
Fred, YOU’RE the one arguing tax RATES, when Kyle was arguing tax PAYMENTS.
Maybe you should understand that basic difference first, son.