Capitol Hill Blue Forums Political Issues Finance, the economy & Economics Their Fair Share

Washington is teeing up "the rich" for a big tax hike next year, as a way to make them "pay their fair share." Well, the latest IRS data have arrived on who paid what share of income taxes in 2006, and it's going to be hard for the rich to pay any more than they already do. The data show that the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history.


The nearby chart shows that the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he's going to cut taxes for those at the bottom, but that's also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half.

Aha, we are told: The rich paid more taxes because they made a greater share of the money. That is true. The top 1% earned 22% of all reported income. But they also paid a share of taxes not far from double their share of income. In other words, the tax code is already steeply progressive.[snip]

So are you saying that the wealthy are not presently finding ways to shelter income from taxes so it is never reported as income?

Leona Mindy Rosenthal Helmsley (July 4, 1920 – August 20, 2007) was a billionaire New York City hotel operator and real estate investor. She was a flamboyant personality and had a reputation for tyrannical behavior that earned her the nickname "Queen of Mean." That image of Helmsley was sealed when a former housekeeper testified that she had heard Helmsley say: "We don't pay taxes. Only the little people pay taxes ...", a saying that became notorious and identified with her for the rest of her life. She was later convicted of federal income tax evasion and other crimes in 1989 and served 19 months in prison (and two more months under house arrest), after receiving an initial sentence of 16 years.

The last paragraph in the article reads:

If Mr. Obama does succeed in raising tax rates on the rich, we'd also wager that the rich share of tax payments would fall. The last time tax rates were as high as the Senator wants them -- the Carter years -- the rich paid only 19% of all income taxes, half of the 40% share they pay today. Why? Because they either worked less, earned less, or they found ways to shelter income from taxes so it was never reported to the IRS as income.


So are you saying that the wealthy are not presently finding ways to shelter income from taxes so it is never reported as income?

The way to soak the rich is with low tax rates, and last week's IRS data provide more powerful validation of that proposition.

You can always depend on the WSJ Op-Ed page to distort facts beyond recognition. A handy way to start such distortion is to resort to "facts" provided by the US Treasury Dept., then misrepresent those "facts" with fuzzy math.

Well done, Wall Street Journal! As usual. Another feather in Rupert Murdoch's cap.

What makes you think the rich pay taxes at all? (McCain, Property Taxes) http://www.newsweek.com/id/143775/

They pay taxes when they are required to retain control of their property. That's how they stay rich.

tricki wicki