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Author Topic: When Did the "RICH" Pay the Most in Taxes and When were our Tax Revenues the Highest? Back to Topics

Champion Author

Joined:May 2004
Message Posted: Nov 13, 2012 11:10:52 AM

"First, Roger Altman, former Deputy Secretary of the Treasury, made the comment that today’s tax code is the least progressive in a very long time, at least with respect to tax rates. The fact is that today’s tax code has generated the most progressive outcomes in the distribution of income tax payments ever! This is a very important distinction as the vast majority of Americans, including unfortunately most politicians and the vast majority of the news media, equate tax rates and changes in tax rates with directionally and proportionally equal changes in tax revenues (if you are the Federal Government) and total tax payment or tax burden (if you are the tax payer).

The purpose of a progressive tax code is to reduce “the tax incidence of people with a lower ability to pay, as it shifts the incidence increasingly to those with a higher ability to pay” (Wikipedia). In other words, the relative share of the tax burden is disproportionately carried by those with higher incomes. Changes in marginal income tax rates are not accompanied by quantitatively and directionally similar changes in the distribution of income taxes paid by various income level groups. In fact, all four times in the past 80 years when marginal income tax rates were lowered, the proportion of total income taxes paid by the top 1% of earners increased, and the proportion paid by the lower 50% of income decreased. At no time was this clearer than with the so-called “Bush tax cuts.” After the 2003 changes in tax rates, the proportion of total Federal income taxes (as well as the ratio of the proportion of taxes paid to the proportion of income earned) paid by the top 1% of earners increased. The top 1% represented 13.3% of all pre-tax income and paid 38.7% of all Federal income taxes in 2009 (July 2012 CBO Report, Distribution of Household Income and Federal Taxes 2008 and 2009).

Not long after Altman’s statement, Rick Santelli joined the CNBC regulars and guest hosts and asked the question (to which he knew the answer) “When were Federal tax revenues at their highest?” Santelli quickly followed his question with the answer, “I think it was during Bush’s second term.” Guest host John Podesta, former Clinton White House Chief of Staff, quickly disagreed and said it was during Clinton’s second term. Who was right? Peak Federal tax revenue during the Clinton Presidency was $2,026 trillion in the year 2000, while peak revenues during the Bush Presidency were $2,568 trillion in the year 2007, having grown almost 45% from 2003 (the year of the Bush tax rate changes) when Federal tax revenue had fallen to $1,782 trillion.

There is an important lesson here. Altman and Podesta are smart men, experienced in government, and widely respected for their knowledge, but they were wrong and their comments went unchallenged. Today, too many smart people are willing to make statements without checking the facts – without doing their homework. Over time these statements become accepted as true by the media, the average citizen, and the politicians charged with making policy and passing important legislation targeted at fiscal issues.

There is too much opinion and ideology driving decision-making in our government and reporting by our media. We need fewer editorials and more tutorials. This country is facing major fiscal challenges and most of the people still think the Bush tax cuts reduced Federal tax revenues, that the Bush tax cuts resulted in the top 1% paying a lower share of the total tax bill, and that the only way to increase Federal tax revenue is to raise tax rates. These commonly held conclusions are all wrong and one of the most important questions we can ask is “Why.” This is not a Republican or Democratic issue, this is not a class warfare issue, this is an issue that underlines whether or not our country can maintain its greatness and make wise fiscal decisions based on data and facts."
link to source

[Edited by: teacher_tim at 11/13/2012 11:13:51 AM EST]
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Champion Author Virginia

Joined:Dec 2005
Message Posted: Nov 15, 2012 7:05:27 PM

A factor overlooked by income taxaholics is that the wealthy they scheme to get more income tax revenue from have the ability to determine what their income is and how to make their wealth grow while receiving less of it as income.

The result is when you raise tax rates on the wealthy, the wealthy as a group end up sending the federal government less tax revenue and this is all done legally.

Obama's greed will result in his administration receiving less tax revenue than his scheme calls for.

Obama has already taxed the middle class and the poor by decreasing the value of the dollar. The only way to prevent the dollar losing all its value is to increase taxes on the middle class and collect taxes from the poor. Increasing the value of the dollar later will result in the economy going into recession. Obama is damned if he does and damned if he doesn't.

When the dollar loses all its value, all entitlement programs will be worthless, the poor, the middle class, and the government will all suffer.
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Champion Author Illinois

Joined:Aug 2005
Message Posted: Nov 15, 2012 4:05:06 PM

Who do you think is the largest single contributing entity to the wealthiest people? Goldman Sachs? General Motors? General Dynamics?

No, it is the United States government. It has been that way since WWII. For those of you who guessed the U.S. Defense department, that entity is a subsidiary of the big enchilada.

Every time a corporation lands a big government contract, their shareholders make money. It is a virtual guarantee.

Seems to me that the ones who get the most out of the system should not be the ones that contribute the lowest percentage of that gain.

Oh, on the other side of that coin, the US Defense Dept is the largest single employer in the entire world.

Want a job?
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Champion Author Maryland

Joined:May 2004
Message Posted: Nov 13, 2012 11:45:48 PM

Agreed Eugene, and you can't get blood from a turnip either. Obama is going to tax the richest Americans to pay for social programs without cutting them back. You know, everyone making $50,000 a year or more.
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All-Star Author North Carolina

Joined:Nov 2012
Message Posted: Nov 13, 2012 12:02:41 PM

Expressing what percentage of revenue is paid by the highest X% really isn't worthwhile data. It doesn't tell us how many taxpayers make up that 1%, nor does it say what their tax rates are, both of which are variables that can make two comparisons into apples and oranges.

The top tax rate for the top tax bracket is now 35%. Sixty years ago it was more than twice that -- over 90%. Of course the top bracket was higher then too, so that's a THIRD variable.

In that time of 90% tax bracket, the POTUS noted:
"we cannot afford to reduce taxes, reduce income, until we have in sight a program of expenditures that shows that the factors of income and of outgo will be balanced." -- Dwight Eisenhower (R) February 1953, shortly after beginning the first of his two terms

In the Reagan era that top rate came a-tumbling down down trickle-down, from 70% in 1981 to 31% ten years later. That's what Reagan did for us. Oops, check that-- that's what Reagan did for THEM (I assume anyone who's on this website is by definition not rich).

And just to note, this article linked in the OP is an editorial. I figured it needed some facts to flesh it out and give it direction.

It's all about historical perspective. Can't make policies in a vacuum.

[Edited by: EKEugene at 11/13/2012 12:05:31 PM EST]
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Champion Author Ventura

Joined:May 2005
Message Posted: Nov 13, 2012 11:50:59 AM

A: >>during the Bush Presidency were $2,568 trillion in the year 2007, having grown almost 45% from 2003 (the year of the Bush tax rate changes) when Federal tax revenue had fallen to $1,782 trillion.<<

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Champion Author Dayton

Joined:Feb 2006
Message Posted: Nov 13, 2012 11:50:10 AM

Right you are, Tim, the USA's current tax scheme is the most progressive in the entire world!

But......It's a Bad Time To Be Rich

In spite of all they pay already:

"Hiking tax rates on $1 million-plus earners to the levels Obama has proposed would raise, at most, about $70 billion per year, according to data from the nonpartisan Tax Policy Center. That would only cut this year's projected deficit by about 8 percent. Lowering the threshold for tax hikes to $250,000 would still only generate about $83 billion--less than 10 percent of the annual deficit."
"Most budget experts realize that there's no way to truly shrink the national debt without raising taxes on the middle class, plus cutting programs such as Medicare and Social Security, that directly serve a lot of ordinary people."

Most budget experts are largely ignored by Congress and by the media. Who wants to hear that kind of truth? It's not popular!
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