The True Story On Taxes. Maybe.

Instapundit links to this from TaxProf Blog about an IRS study on tax burden from 1979. The conclusion is that even though the tax code has become slightly less progressive since the tax cuts in 2001 and 2003, the top 20% of tax payers account for 94.74% of the country's taxes while the bottom 20% pay 0.65% The TaxProf has a nifty little chart up. [Ed- I goofed the numbers. See comments below.]

Now, I'm not sure of the numbers, but I can bet dollars to croissants (not to be too French about it) that someone will calculate the per capita percentage of income each group pays. Then the faux fur will start flying.

UPDATE: What did I say? Brendan Nyhan says that the rich are getting too damn rich:

When you receive a disproportionate increase in pre-tax income, you're going to pay more taxes -- this isn't rocket science. (There are other changes that affect relative tax burdens, of course, but to not even mention the massive gains made by the rich over the last two decades is intellectually dishonest at best.)

Okay, so this isn't exactly what I predicted, but it's in the same vein. The argument that someone else is "receiv[ing] a disproportionate increase in pre-tax income" illustrates why most Americans do not trust the Democrats on tax policy anymore (which is ironic, since Bush and the GOP have shown themselves to have their heads in the spin cycle when it comes to combining tax cuts and spending increases). Complaining that the group paying almost 95% of the nation's taxes isn't being taxed enough just makes the complainer look foolish.

Now to be fair, Brendan is ostensibly saying that it's disingenuous to talk about increase in tax burden without pointing to the relative growth in incomes. That's correct. And it's hard to infer from his language whether he's really "complaining" or not. But what is at the center of the debate is the concept of a progressive tax system and who should bear the burden of paying for the nation's expenses.

Those for a progressive tax contend that the rich should shoulder more of a burden because they can and that's "fair." Those against such a system see nothing fair about it. Higher marginal tax rates are indeed punitive, but only to a certain extent. The class of taxpayers being punished are not really the rich or super-rich but those in the middle where the tax rates reach an inflection point.

Here's the (not-so) little secret about the tax code and politics: Neither the Democrats nor the Republicans give two twists about the millions of middle class taxpayers who carry much of the tax burden. These are the people who find out, for instance, that even though they are not rich by any stretch, they are subject to draconian provisions such as the Alternative Minimum Tax.

So when you read something that focuses primarily on the rich and the poor, remember: Most Americans are neither. But political hacks want to shoe-horn you into one or the other.

Comments

[Brian H]

Your morphed cliché just made me realize that the original has been dusted into anachronism by the sands of time. "Dollars to doughnuts" is hardly that much of a scalar contrast any more. How much would you expect to pay for a Krispy Kreme, for example? A 2003 price list I was able to Google said "$1 for one, $9 for a dozen."

Sigh.

[Daniel]

Yeah, but look at the stock KKD has plummeted (one of by better calls, I must say) the irony here is that now you can buy a share of Krispy Kreme for less that a dozen Krispy Kremes.

[Noumenon]

The conclusion is that even though the tax code has become slightly less progressive since the tax cuts in 2001 and 2003, the top 20% of tax payers account for 94.74% of the country's taxes while the bottom 20% pay 0.65% The TaxProf has a nifty little chart up.

The TaxProf's chart says the top 20% pay 68.17% of the taxes. Don't know where you got the 94.74 from.

[Daniel]

I added the figures shown in that chart which was a mistake. Honestly, I don't know what I was thinking. Thanks for the correction.