Skip to main content

View Diary: What the rich pay in federal income tax- pales to what the middle pays in state tax (16 comments)

Comment Preferences

  •  Historical average tax rate, not effective rate (1+ / 0-)
    Recommended by:
    unfangus

    There are many tables on that website with data on effective marginal rates, but that table is labeled historic average tax rate, not effective tax rate.

    Looking at it, it does not look like what you say it is. Is there some reference that says this is the effective rate?

    This chart from the NYT is clearly labeled effective income tax rates, and it does not match the table you cite.  

    Effective income tax rates

    "When strong winds blow, don't build walls, but rather windmills: there is a way to turn every bit of adversity into fuel for improvement." -Nassim Nicholas Taleb

    by Urban Owl on Sat Nov 02, 2013 at 04:12:11 PM PDT

    [ Parent ]

    •  Those are effective rates. Look at the notes (2+ / 0-)
      Recommended by:
      Victor Ward, VClib

      at the bottom.  it's based on CBO data, and explains how those effective rates are calculated.

      You can see the CBO data at the pdf here.

      •  Thanks. (3+ / 0-)
        Recommended by:
        salmo, NoMoreLies, unfangus

        Did you see the Ezra Klein chart below? When you add in state and local taxes, we really do not have a progressive tax system.

        "When strong winds blow, don't build walls, but rather windmills: there is a way to turn every bit of adversity into fuel for improvement." -Nassim Nicholas Taleb

        by Urban Owl on Sat Nov 02, 2013 at 04:29:18 PM PDT

        [ Parent ]

        •  Two problems with that chart. (6+ / 0-)

          (1) those are 2007 numbers, according to the notes, and (2) It DOES show progressive taxation:  the highest quintile pays the highest percentage of income in federal and payroll taxes combined.  

          According to that chart, those who pay the highest rate are the top 5%.  The top 1% pay a little less than the top 5% primarily because of the effect of capital gains numbers.  

          But as I said, those are 2007 numbers, according to the notes.  Three significant things have happened since then.  (1) The top marginal rate on income over $400,000 ($450,000 for couples) went from 35% to 39.6%.  (2) we've added an additional .9% to Medicare taxes for incomes over $200,000; and (3) we've added a 3.8% net investment income tax.  

          •  Okay, mildly progressive taxation (2+ / 0-)
            Recommended by:
            NoMoreLies, unfangus

            Great. Combined with the lack of inequality-reduction policies, the rich get richer, the poor get benefit cuts, and the middle gets smaller.

            The fact is that all productivity gains have gone to the top for the past three decades while tax burdens on the top have been  steadily reduced until the recent timid measures you cite. Compared to most post WW2 history, the people at the top pay really low taxes.

            For progressives, the rising inequality in the United States is a, if not the, major issue. One possible policy implication might be increased progressivity in taxation.

            Instead, the debate is over how much to cut food stamps.

            "When strong winds blow, don't build walls, but rather windmills: there is a way to turn every bit of adversity into fuel for improvement." -Nassim Nicholas Taleb

            by Urban Owl on Sat Nov 02, 2013 at 05:09:01 PM PDT

            [ Parent ]

            •  This is not true as of this year (1+ / 0-)
              Recommended by:
              VClib
              while tax burdens on the top have been  steadily reduced until the recent timid measures you cite. Compared to most post WW2 history, the people at the top pay really low taxes.
              After the fiscal cliff deal, we returned to the Clinton rates on the top about 1% (household -- two incomes -- of $450,000 and up).  According to CBO data on effective federal income tax rates, the Clinton rates were the time when the 1% paid the highest federal income taxes ever, at least since the CBO began compiling the data during the Carter years in 1979.  The CBO data on federal individual income tax rates are the SECOND chart here.  In 1979, pre-Reagan, the top 1% paid an effective federal income tax rate of 22.7%.  In 2000, the top 1% paid an effective federal income tax rate of 24.7%.  By returning to that Clinton top rate (with a few deductions phased out since 2000) you should see this year the top 1% paying, once again, their highest effective federal individual income taxes ever, according to the CBO -- around 24% - 25%.
        •  I think progressivity is over blown (0+ / 0-)

          creating a stable economy should be the goal, and for 50 years, 1938-1988, there were 3 recessions where we saw -2% GDP. During the previous 100 yrs, a downturn every 4.3 year, 28 of 31 downturns saw peak to trough of 20-33%, unemployment of 15-30% lasting 1 to 5 years.

          Since 1988, we've had 3 recessions, one of which went worse than -2% GDP and is now in its 5th year. The 1986 Tax Reform Act removed many of the incentives for domestic inventment, this cost us jobs, combined with the increased outsourcing in the 1980's put us on the path to ultimately destabilizing our economic system/marketplace.

          I would argue that a tax system that meets the dictionary definition of being progressive, may still foster instabilities. SO tax fairness is not quite the right term, having shorter and shallower downturns should be the goal.

          .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Sat Nov 02, 2013 at 05:03:57 PM PDT

          [ Parent ]

          •  Stability is more complex (2+ / 0-)
            Recommended by:
            Roger Fox, kurt

            This last recession is qualitatively different from earlier postWW2 ones. It is more similar to the Great Depression, in cause and consequences, than anything else.

            Tax policy can't deliver stability by itself,  although automatic stabilizers in tax and spending can work for the ordinary downturns, limiting length and severity. But not for the liquidity trap scenario of today.

            Real long-term stability requires that the financial sector be strongly regulated. Banking should be boring, as it was for a long time.

            But we now have severe and rising inequality, a broken political system, and little chance of having good economic policies.

            Watching  the discussion of how much to cut food stamps is profoundly depressing.

            "When strong winds blow, don't build walls, but rather windmills: there is a way to turn every bit of adversity into fuel for improvement." -Nassim Nicholas Taleb

            by Urban Owl on Sat Nov 02, 2013 at 05:19:06 PM PDT

            [ Parent ]

Subscribe or Donate to support Daily Kos.

  • Recommended (175)
  • Community (71)
  • Baltimore (50)
  • Civil Rights (42)
  • Bernie Sanders (39)
  • Culture (34)
  • Elections (26)
  • Law (26)
  • Economy (25)
  • Freddie Gray (23)
  • Education (23)
  • 2016 (22)
  • Rescued (22)
  • Labor (22)
  • Hillary Clinton (22)
  • Texas (21)
  • Racism (20)
  • Media (20)
  • Environment (20)
  • Barack Obama (19)
  • Click here for the mobile view of the site