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Half Of The $900 Billion In Tax Breaks Will Go To The Richest 20 Percent This Year

June 2, 2013

Half Of The $900 Billion In Tax Breaks Will Go To The Richest 20 Percent This Year

First, your very own CBO admits that what you are looking at is rates. Not effective rates, which is what counts. This is what people actually pay. Here is that data. And for a good side-by-side comparison, here is pre-tax income share. As you can see, effective federal tax rates for the top quintile are on the order of 25%, while they earn ~55% of national income (2005 — last common year on tables). For the middle quintile, this is 14.2 and 13.4%. So, in fact, the proportionate tax burden on the middle class is greater than on the upper class, adjusted for net income. Second, state and local taxes, which are excluded from the CBO analysis, are far more regressive than federal taxes, and this means that the net taxation for high-income groups is even lower. Third, your argument about FICA taxes needing to be excluded from the equation applies to the wealthy as well — they pay those taxes, and they too get that money back. More importantly, people of lower wages die far younger, so they collect far fewer benefits than people of higher wages. Finally, and most importantly, I don’t buy the premise of your argument at all. Income inequality is a moral issue, and we should strive for a society that is far more equal than the one we have (in the US especially, but ever-increasingly, in the rest of the developed world as well). Taxes should grow with income, and to imply that the rich are paying a fair share because the top 1% pays/earns 14/13 while the middle pays/earns 8/13 is missing the point. Its not the differential that is the problem, its the fact that 20% of the country earns 55% of the income. To suggest this is fair is a pretty cynical view of your fellow human beings. Income inequity is self-reinforcing, due to various sociological factors, and is globally proving to be a threat to democracy. This needs to be reversed, and progressive taxes are the easiest way to do this. Ideally, taxes rates would be approximately logarithmic, meaning that, e.g, your first $1,000,000 of income is taxed at half the rate as your next million etc. This would encourage the "job creators" to work that much harder. I never got the argument that raising taxes hurts effort — it should raise it, because if you want a million $, and now you have to work twice as hard, well, that is what you will do! I am tired of this being framed as some sort of economic issue. It is a simple fairness issue. Inequity is transmitted intergenerationally. There are many many feedback loops (history is replete with examples of highly stratified societies ; not so much for relatively egalitarian ones, at least for large populations). At the end of the day, if you believe in human equality, you have to realize that economic power is far more important than and indeed a key driver of political power, and consequently, economic inequity is fundamentally anti-democratic. A reasonable argument can be made that some inequity is good to encourage labor market participation etc., but aside from that, we should actively go against it. TL;DR: income inequity is a moral issue, and OP is overstating the case that rich pay more in taxes.

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