I have to echo Steve's observation. Whenever someone wants to distort the tax discussion to allege that the rich are paying "their fair share" or more of the tax burden, they start with asserting something like "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." Here's how deceptive these comments actually are:

First, by lumping all of those in the top 1% together, it deliberately skews the numbers, because those in the top half of that percent earn considerably more than those barely in the top 1%. It helps further to blend it down to the top 10%, as the article does, by further obscuring the actual numbers.

Second, notice how they only talk about % of total income, not actual tax rates? That is because as a percentage of income those below the top thresholds pay a much larger percentage of income in taxes than those in the top 10% and higher. Those who make less than $100,000 a year earn nearly all of that income from wages, which are taxed not only as income taxes, but also for Social Security. So, for example, my real income tax rate is over 41% (income tax at 28% plus 12.6% for FICA and additionally Medicare taxes (don't know the percentage). Whereas, those earning over $1 million in compensation earn the bulk of that "income" in the form of stock options and other compensation "packages" that allow deferral into tax-exempt or tax-reduced forms. For example, the executives at Bear Stearns:
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Over five years, from 2002 through 2006, Cayne took home total compensation — salary, bonus, restricted stock, and stock options — worth a combined $156 million. Current CEO Schwartz made $141 million. Former Co-President Warren Spector, deposed after the hedge fund debacle, did the best of them all, reaping $168 million.
Bear Stearns big shots reaped big paydays Now the key here is that they received the bulk of these bonuses as "stock options" for which they did not pay present taxes, but deferred paying on, and then paid only capital gains rates (15%) when they sold off that stock and reinvested it - again leveraging the tax code to reduce their tax burden. Executive compensation - wikipedia

So, where I earn 90% of my income from wages and pay 41% in taxes, they earn 90% of their income from capital gains and pay only 15%. Hmmmm... seems "fair" to me!

Addendum
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[As of 2001] In terms of types of financial wealth, the top one percent of households have 44.1% of all privately held stock, 58.0% of financial securities, and 57.3% of business equity. The top 10% have 85% to 90% of stock, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.
Wealth, Income, and Power

Last edited by NW Ponderer; 07/21/08 04:33 PM. Reason: Additional information and citation
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.

Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich