The Most Depressing Article You’ll Read About Taxes And Rich People (Today)
A must-read from the New York Times on why rich people crying about taxes are full of it:
Most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.
Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.
Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010.
The uneven decline is a result of two trends. Congress cut federal taxation at every income level over the last 30 years. State and local taxes, meanwhile, increased for most Americans. Those taxes generally take a larger share of income from those who make less, so the increases offset more and more of the federal savings at lower levels of income. [E.A.]
So much for that whole “47% of people pay no taxes” line. Even worse:
Governments still collected the same share of total income in 2010 as in 1980 — 31 cents from every dollar — because people with higher incomes pay taxes at higher rates, and household incomes rose over the last three decades, particularly at the top.
There are now many more millionaires, in other words, paying more than they did in 1980, but they are paying less than they would have if tax laws had remained unchanged. And while they still pay a larger share of income in taxes than the rest of the population, the difference has narrowed significantly. [E.A.]
So the only reason wealthy households are paying what feels like a higher tax rate is because they make so, so much more money compared to when their tax rates were higher that they’re paying a larger amount of taxes even though their rates have gone down; nice problem to have! Of course, in the same period wages for everybody else have stagnated or declined, yet lower income families are paying a higher amount in taxes without making more money.
To sum up, household incomes for the wealthy increased drastically in the past thirty years while their tax rates have decreased considerably; meanwhile, wages for lower income households have gone down, while the amount they paid in taxes went up. And this was the system Mitt Romney wanted to fix to make it fairer for the rich.