July 23, 2012
President Obama and Tax Fairness
A new CBO report shows the share of taxes paid by the top 20% has gone up over the last 30 years, while the share of taxes paid by everyone else has gone down.
If fairness in paying taxes means the amount you pay is based on the amount you make, then the only group in America paying at least a "fair share" is the top 20% -- people who make more than $74,000. For everyone else, the tax code is a bargain.
You wouldn't know this from President Obama's rhetoric, but our tax system, according to a recent report by the CBO, is incredibly progressive. Consider: The top 1% of income earners pay an average federal tax rate of 28.9%. (See the nearby table.) The average federal tax rate on the top 20% is 23.2%. The 20% of taxpayers earning between $50,100 and $73,999 pay an average 15.1%, and so on down the line. The CBO report includes payroll as well as income taxes paid.
There's also another way of looking at fairness, and that's the tax burden. Here, consider the top 20% of income earners (over $74,000). They make 50% of the nation's income but pay nearly 70% of all federal taxes.
The remaining 30% of the tax burden is borne by 80% of the taxpayers, those who make less than $74,000. In short, this group's share of taxes paid, 30%, is lower than the share of income they earn, 50%.
One reason our country is so divided is because the president keeps dividing us. If taxes need to be raised to fight a war or fund a cause, the president should ask everyone to pitch in. If the need is national, the solution should be national—and that includes all of us.
But that's not how Mr. Obama governs. We learned during the 2008 campaign that he believes in spreading the wealth around. And recently we learned he doesn't believe that successful people made it on their own. Without the government, the president tells us, job creators and entrepreneurs would not be able to make it in America.
It's really the other way around. Without job creators and the successful, the government wouldn't have any money. So next time Mr. Obama meets someone in the top 1% or even the top 20%, instead of saying they're not paying their fair share, he should simply say thank you.
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It is about time someone in the tax profession finally stated to say something about our current President's outlook and policy. I hope more and more people will start waking up, especially since I am in the 74k bracket. To get meaningful tax reform, the U.S. will need a Congressional commission similar to the BRAC - where it is all or nothing.
Posted by: Harry | Jul 23, 2012 4:52:58 PM
Of course, whenever someone on the right cries about the share of taxes paid by the top 20% increasing over the past 20 years, they will NEVER mention the corresponding increased share of income of that same group over the same period. Dishonest and disgusting.
Posted by: a. nomus | Jul 24, 2012 8:56:51 AM
My mistake, he mentions the share of income here, but I'd like to see the numbers for the top 1%, rather than the top 20%. I don't think it would look quite so "unfair".
Posted by: a. nomus | Jul 24, 2012 9:04:31 AM
Harry, you do know that the author of this piece is NOT a tax professional don't you? It is Ari Fleischer who was George W. Bush's press secretary. Hardly an unbiased source of information.
In addition, I find this statement of his ludicrous:
"If taxes need to be raised to fight a war or fund a cause, the president should ask everyone to pitch in. If the need is national, the solution should be national—and that includes all of us."
Has he forgotten the positions he espoused and trumpeted during the Bush Administration: cutting taxes while fighting a two front war?
Posted by: Texcap | Jul 24, 2012 10:59:00 AM
Numbers tend to support whoever is manipulating them. That the WSJ would defend the wealthy and make the misleading claim that they are paying more, relative to everyone else is not surprising. The fact that the top tax rate, the rate the wealthy have paid, has gone down and down over the last 30 years (to its current rate of 35%) and the rate for investment income, predominantly paid by the wealthy, has dropped drasticlly to 15% would lead any person with even rudimentary numeracy to conclude that the taxes on the top have gone down. But that would be politically incorrect. It pays more to defend billionaires then it does to defend the middle class.
Posted by: George W | Jul 24, 2012 11:50:16 AM