The Tax Foundation announced on their blog recently the release of “Fiscal Fact 183” which analyzes income data from the IRS. The lede from their publication report highlights the state of our progressive income tax:
“In 2007, the top 1 percent of tax returns paid 40.4 percent of all federal individual income taxes and earned 22.8 percent of adjusted gross income. Both of those figures—share of income and share of taxes paid—are significantly higher than they were in 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes.”
For folks who like pictures, their blog page illustrates the tax side of the picture with this graphic, which I have taken the liberty of copying to this blog to avoid hotlinking.
Their report is a fascinating read, and given that they get their data directly from the IRS gives it a fair amount of credibility. The Tax foundation even makes the data available on their data download page.
I like the fact that the Tax Foundation covered both the tax and income side of the picture. I think it gives them some additional credibility. I would love to know how these numbers compare to other countries.
I’d also like to know, how far it can practically go and how far people think it should be allowed to go. Is there every a point where someone would say, “Ya know, the top 1% of income earners are paying more than their fair share of tax” Or is a fair tax on the top 1% whatever we need it to be to pay for whatever we need to pay for?
I've responded indirectly to this post here:
http://eclectichedonist.wordpress.com/2009/08/05/how-i-hate-misleading-graphs/
The problem with the graph is that it's misleading to present that statistic alone. Proportion of income earned vs all the income earned by taxpayers tracks that line exactly, and the way that it's presented in most of the articles makes it sound like the increase is wildly out of proportion with economics when in fact it tracks the most relevant other variable exactly.
Much more relevant is that the tax rate on the top 1% is almost 10% points more than the tax rate on the other 99%. That's a better story and not misleading.