A recent NY Times article included a graph showing the amount of taxes paid to the federal government based on income groups. While I like the graph it does not explain what the income thresholds are for each income group. However, I was able to pull out of the original journal article that the average income for the highest earning 0.01% was $18,113,612.
See also: What does Top 1%, Top 0.1%, Top 0.01% mean?
2005 US Income Distribution part 3
[tags]NYTimes, Taxes, income inequality, wealth, income distribution, superrich[/tags]
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It would be interesting to see GDP growth rates plotted in there too, to see if there’s a correlation between marginal tax rates and growth.
If the start of the graph were to be the begining of the 1900’s instead of 1960’s a very different picture would emerge.
vs GDP AND starting in 1900.
Now that would tell us something.
Me thinks starting in the 1960s gives the impression that the more modern tax rates are a aberration, whereas I think the 1960 tax rate was the aberration.
the newyork times is the aberation
The question that I beleive is where the recent trend of responsability for tax burden is moving. Is the proportional burden proportionate to the proportional income and weather should it be based upon various groups productivity. It is disengenuous to posit about the trend from 1900’s original tax structure was created because it was as we all know only to effect the super rich. However, it highlightes the tax creep that all groups are chafing about.
What this doesn’t show and which renders this chart useless is that effective (the real rates paid) tax rates for all US households have declined 50% for the lowest quintile wage earners from 1979-2005 while only 7% for the highest quintile from 27.5% to 25.5%. The impact of standard deduction and personal exemption have a significant effect on the real income taxed at lower wage levels which must be considered when understanding who pays and how much.
Thanks for this Catherine..
@AM, yes it would be helpful to consider effective tax rates paid after adjustments and credits.
What exactly is the y-axis measuring? A summation of all taxes paid -or- a weighted summation of applicable rates -or- what?
Less on economic charts and graphs, more about financial literacy of the masses, please promote this visual explanation of income taxes (http://www.seeingfinance.com/?p=88) and get in touch if you would like to contribute.
Was searching for taxes paid by income and this link came up.
The NYT is a source of misinformation. Of course tax RATES have come down, Kennedy and
Reagan both did that, as did Bush II. The issue is NEVER just the rates, but how much money is raised at the various rates. Just because a taxpayer is at rate X does not mean he will pay rate X. Deductions make big differences.
The only true concern over tax policy is “WHAT RATES MAXIMIZE REVENUE?”. The NYT knows that as the top rate declined, MORE income tax revenue was received from the “rich”. But, of course, it does not want to discuss this. The reader has to go to other places like the following links:
http://www.taxfoundation.org/news/show/250.html
http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes
http://www.thepolicyreport.net/2009/01/05/californias-lopsided-income-tax-system/
to find out what the effect of tax rates is upon tax revenue. Apparently, some of the comments here figured that out.
The NYT is worse than bigoted, it is a source of MISinformation.
AM and Robert are exactly correct. Refer to http://www.cbo.gov/doc.cfm?index=8885 where it shows that the effective tax rate paid for the top quintile of tax payers had a slightly rising trend over a similar period. Whereas the effective tax rate paid for the bottom four quintiles all decreased. The bottom quintile decreased the most.