Top 1% Pay 35% of Federal Income Tax; Will Only the WSJ Notice?
As noted in a Wednesday subscription-only editorial, Nancy Pelosi already has the steeply progressive tax system Democrats want:
The Top 1% Pay 35%
Maybe our liberal friends are onto something. They keep saying the rich should pay more taxes, and it turns out the rich already are! That's one of the valuable lessons from the IRS's annual study of income tax data, just released for 2004.
Americans who earned more than $1 million in adjusted gross income paid $178 billion, or an average of $740,000 per filer, in income taxes in 2004. That's up about one-third from 2002, the year before the Bush tax cuts in marginal income-tax and dividend and capital gains rates. The wealthiest 1% of tax filers paid a remarkable 35% of all individual income-tax payments that year.
I love the following analogy, but WSJ could have gone further with it:
..... Here's a way to think of the distribution of current income-tax payments: Imagine a banquet attended by 100 random Americans. If the bill for the meal is distributed like the income tax, the richest person in the room is required to pay one-third of the tab -- or more than all 50 attendees with a below-average income. The three richest people are charged as much as the other 97. And the 30 or so lowest-income people in the room -- those with a family income of $30,000 or less -- pay nothing and eat for free.
Actually, thanks to the Earned Income Credit, many of those 30 lowest-income people get paid to eat, thanks to the rest of the people in the room.
This is by any definition a "progressive" tax system. Make that highly progressive. It's true that lower-income workers are also dunned with payroll taxes, but that still doesn't do much to alter the fact that the current tax code really does soak the rich.
It would be nice if someone else in the formerly Mainstream Media would let us know that. I don't expect to see it happen.
As to Nancy Pelosi, Charlie Rangel, et al -- Don't worry, be happy. You have what you want.
Cross-posted at BizzyBlog.com.