Are those family incomes or individual incomes you are reporting?

I suspect that median FAMILY incomes
are what you are showing.

If these graph come from a study of tax returns, then they are actually mixed.
Some joint, some individual returns.

I never liked tax graphs that don't break out the top 1%. Simply, it makes no sense to group together someone at 80% (Just a little over $100k) with people making 10x that (or more).

$100k is only twice the median income - two working adults, or one adult at the height of many careers. They might live comfortably, but there's a lot they struggle with and can easily get wiped out. Someone pulling down a million bucks annually has a lot less to worry about. Consequently, their "tax burden" is light years apart.

there's some very useful information on this subject right here:

http://economix.blogs.nytimes.com/2009/04/13/just-how-progressive-is-the-tax-system/

in short, when you look at the total question of taxes (federal, state, local), you end up realizing we have a fairly flat tax system....

Suggestion for another graph. Include an adjusted after-tax income to take account for the value of Federal Gov't provided social programs (think EITC/TANF - and Medicaid/Medicare/Social Sec IF we can include comparable values for the employer provided benefits received (and not taxed) by higher income earners).

Even with these included, I we'll see a stark difference between the real take home of the bottom 60% compared to the top 20%, but we'll also knock out the idea that the bottom 20% are living fat off of "gov't cheese" but not paying their fair share of taxes.

A similar comparison could be done between Federal Housing assistance through HUD and the value of the mortgage deduction to high earners, etc.

eric, i missed your comment when i posted mine at 11:22: see the link i provided for info on the top 1% (who, as i noted in yesterday's thread, earn 20% of the income).

Where's the fancy chart showing:

TAX AS PERCENTAGE OF DISPOSABLE INCOME?

"Tax burden" is a phrase used by conservatives to imply that being taxed is unfair and wrong. You certainly wouldn't want to bear a burden, would you? It's an ideologically loaded phrase. So I disagree with you that "tax burden" is a useful term. "Tax share" is a much better substitute for progressives to use. It implies that our government needs a certain amount of revenue and everyone needs to put in a share.

Another component of fairness is how much you get back vs. how much you put in. Suppose I go to lunch with someone who has four courses and six martinis while I have a tea and tuna salad sandwich. When the bill is presented, he owes $72 and borrows $12 from me, while I owe $8. Picture my annoyance when he tells our colleagues back at the office that he paid for over 80% of our lunch in order to make him look good and me like a cheapskate.

My strong suspicion is that any rational tax analysis would show exactly this phenomenon writ large when it comes to taxation in this country. Certainly it seems to me that I don't get the government that I want, but the government Larry Summers wants.

Lucidity is on the right track. We need a better term for this. How about "tax duty," implying that those who pay more (in absolute dollars) are doing something righteous, and those fat cats who do everything to avoid paying are shirking their responsibilities? Another point is that these tax charts that ignore important things like payroll taxes and state taxes are basically worthless. In NY I pay much more in state income tax then I do in federal income tax.

great graph
1) could you provide a link to the source of the data?
2) could you graph the ratio of the blue to the green bars?

In a "fair" world where all income is taxed equally the ratio of blue to green would be 1:1. From eyeballing your graph it looks like for the highest quintile the ratio is 95:100 which implies these people are paying a whopping 5% too much.

But is their burden greater than the middle-income taxpayer left with $52,100?

Yes, of course it is. The red bar (share of taxes) is smaller than the blue car (share of income) for all quintiles except the top one. The top quintile is the only one that pays a higher share of taxes than its share of income. How can you can claim that is not a greater tax burden I have no idea.

in short, when you look at the total question of taxes (federal, state, local), you end up realizing we have a fairly flat tax system....

That's right, Howard. An increase from 18% to 32% can reasonably be characterized as "fairly flat."

I swear, you'd assert that "black" is really "white" if you thought it would serve your ideological purposes.

How can you can claim that is not a greater tax burden I have no idea.

JT: Of course you have an "idea" of how Ezra can make this claim; you're simply being disingenuous. Ezra is making the perfectly reasonable claim that to be meaninful the term "burden" has to be looked at in the context of (for lack of a better term) affordability. I think it's eminently reasonable to posit the notion that the smaller federal tax burden for people in the middle quintile (on average about 14% of income) is more difficult to pay -- is less easily afforded, in other words -- than the higher tax burden (on average about 26 % of income) paid by the top quintile. The former, after all, are left with about 50 grand to live on, as opposed to the 180 grand of the latter.

That's right, Howard. An increase from 18% to 32% can reasonably be characterized as "fairly flat."

That's just a bit over ten percentage points from the poorest quintile to Lloyd Blankfein -- in other words fairly flat.

That's right, Howard. An increase from 18% to 32% can reasonably be characterized as "fairly flat."

That's just a bit over ten percentage points from the poorest quintile to Lloyd Blankfein -- in other words fairly flat.

Tags closed this time.

jt: Since you're paying close attention, surely you noticed that the tax burden peaks at the 95th percentile and then decreases to below 31% at higher incomes.

I wonder how all these statistics would look if the tax burden was compared to total wealth rather than just income?

Not to be overly wonky, but you may want to look at H. Peyton Young's _Equity_. There is a very nice chapter on equity as it pertains to taxation, and runs through several different ways of thinking about it. Conveniently, it also includes a nice argument by JS Mill that shows that the best way to think about equity when it comes to taxes is the system of taxation that relies on equalizing the marginal burden of taxation. That is, everyone suffers the same amount of pain (in terms of opportunity costs) in paying their taxes. It avoids any distortions in behavior, as marginal utility gains stay as they would be under a no-tax scenario.

JT: Of course you have an "idea" of how Ezra can make this claim; you're simply being disingenuous. Ezra is making the perfectly reasonable claim that to be meaninful the term "burden" has to be looked at in the context of (for lack of a better term) affordability.

No, "burden" doesn't mean anything like "affordability." And "affordability" is a pretty meaningless standard, anyway. Taking 25% of my income reduces my ability to buy what I could otherwise "afford" to buy more than taking 3% of my income. So the rich are getting screwed even by your "affordability" criterion.

That's just a bit over ten percentage points from the poorest quintile to Lloyd Blankfein -- in other words fairly flat.

No, it's an increase in the total effective tax rate of 14 percentage points, or almost 80%. A 32% tax rate is almost 80% higher than an 18% tax rate. The claim that this can reasonably be described as "fairly flat" is preposterous.

I was just thinking the other day, as I look for a new home that all of the new construction within two hundred miles of my home is aimed at people making more money than my family.

We're just below the top 10%.

All of it. Not just some of it. All of the new construction requires family incomes of multiples of what we have.

Okay, so we're not rich, we don't get a 'new' home or apartment. And so I look at older houses... And if we had the down payment, we could pay for a fairly expensive house, we don't have that much. And then I see that only a tiny fragment of even the older homes are within what the bank will lend us with what we have on hand. A single or double wide modular house in a floodplain under a flight path next to the freeway. But not within walking distance of any grocery stores or even sidewalks.

It's pretty crazy.

jt, the difference between 1 and 2 is 100%; nonetheless, if i have $1 and you have $2, the distribution of money is fairly flat.

now let's try and get serious, which admittedly appears to be beyond you.

do you have any frickin' clue how little money is made in the bottom two percentiles? that the overall tax rate on people make $10K is 18% is a fundamental irrelevancy.

what's relevant is what happens once you step up the economic ladder, and waddya know: if i have a median household income, my effective tax rate is 27%. if i am in the upper 1% of income (meaning my income is a minimum of 8x the median income - minimum, mind you), my effective tax rate is 30%.

rational human beings call that a fairly flat tax system.

right-wing morons expound on the percentage differential between 18 and 32 and feel smug about their stupidity. thank you for the living demonstration of same.

No, "burden" doesn't mean anything like "affordability."

Well, it appears that Ezra is using the term to mean something like "affordability" and we are, you know, commenting on his post.

So the rich are getting screwed even by your "affordability" criterion.

No, they're not "getting screwed" unless "getting screwed" has come to mean living in mcmansions, driving expensive imports, and enjoying gold-plated health insurance.

No, it's an increase in the total effective tax rate of 14 percentage points, or almost 80%. A 32% tax rate is almost 80% higher than an 18% tax rate. The claim that this can reasonably be described as "fairly flat" is preposterous.

The poor group pays just under 20%. The plutocratic group pays just over 30%. That's a tad more than ten points. In other words, it's fairly flat. And, as Howard (7:08pm) points out, the difference flattens yet more if we're comparing the plutocrats to those at the median.

jt: A 32% tax rate is almost 80% higher than an 18% tax rate. The claim that this can reasonably be described as "fairly flat" is preposterous.

Let's take that argument to it's logical conclusion. If those who are paying no income tax (because they make below the exempted threshold) are effectively taxed at 0%, and everyone else gets taxed at a rate of one one-hundredth of 1% on income above that amount, then the system is not "reasonably flat" because the ratio between the two is effectively infinite, even though the difference between the two is one-hundredth of 1%?

Saying someone gets taxed at "twice the rate" doesn't tell us very much until we know what that rate is. If your risk of coming down with a disease is twice the national average, that can sound pretty bad--unless the national average is minuscule to begin with, in which case you probably wouldn't worry very much. Twice almost nothing is still almost nothing.

Now, paying 16% more on each additional dollar is not "almost nothing." But though I could be wrong, I doubt that even jt thinks that people $20,000 a year should pay any income taxes at all, so I'd guess that just about everyone agrees on some degree of progressivity. The only question, then, is how much.

Sorry, before I get flamed for a simple arithmetic error, that's a 14% difference, not 16%.

It doesn't look like any of these graphs take into account the fact that more skilled members of the workforce who earn more end up paying a larger dollar amount, yet still recieve the same social benefits we all do. Any additional benefits enjoyed by the rich come out of their own pocket. It's called incentive. It's the reason why they achieved their success in the first place. Over-taxing the rich to give to the lazy would be just as detrimental as letting the rich live in mcmansions.
some of these arguements suggest that "fat cats" were randomely chosen to recieve million dollar incomes, that "the humble poor" are getting screwed and that the "burden" on the fat cat is much less than the median earner who is on the fence with his $50,000. how about the notion that the fat cats did something to deserve their million dollar incomes? what if they invested their entire life savings to achieve their dream and it was a success? why should that person now be obligated to pay half their income to fund society just because someone at the bottom decided that $500,000 take home pay is "too much"?

why should that person now be obligated to pay half their income to fund society just because someone at the bottom decided that $500,000 take home pay is "too much"?

It's not because anyone decided it was "too much." No one is limiting incomes. It's about apportioning the costs of running government and its programs.

What's the alternative? Every dollar not paid by someone making above $500,000 is going to be paid by someone making under that amount. Do we really think taxes on those barely putting food on the table are too high?

The wealthy are doing fine under today's tax rates. They even did fine under the higher Clinton-era tax rates. I should know, being one of them.

What if the cost of everything for an individual was based on "affordability"? This business of tax burden is just a smokescreen for class envy.

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