Friday, April 22, 2011
Last week, President Obama denounced tax cuts for the wealthy and yearned for the "fiscal discipline during the 1990s." Were he right, you would expect the share of taxes paid by the rich to have declined since then. Has it?
We know that the top 1 percent earners pay a greater share of Federal income taxes than the bottom 95 percent. But did you realize that the proportion of Federal income tax paid by that top 1 percent actually was higher in the Bush years than under Clinton? It's true: using historical data from the Tax Foundation, I calculate that the top 1 percent paid 32.75 percent of Federal income tax from 1993 through 2000, as compared with 37.06 percent from 2001 through 2008. Contrary to conventional wisdom, the rich are paying more.
Yes there are other Federal taxes--though only the top quintile pays more to the Feds than its share of income. My point is that it wasn't the Bush tax cuts. It wasn't discrimination against the poor. It was spending -- especially entitlements -- approved by both Democrats and Republicans for decades.
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Plus Hauser's Law predicts 18-19% of GDP as tax revenue regardless of mix of tax rates. Hence your choice is 18-19% of a larger/expanding pie with taxes that are incentive based or 18-19% of a flat or shrinking pie with disincentive tax rates.