ECON/POLITICS: Economic stratification in taxes

From: Mike Lorrey (mlorrey@yahoo.com)
Date: Mon Mar 24 2003 - 12:19:25 MST

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    It is now a fact that the top 50% of wage earners in the US pay over
    96% of income taxes. Despite the fact that this link is at Rush
    Limbaughs website, I have found its numbers to be accurate. I am using
    it because it is in an easily emailed format.
    http://www.rushlimbaugh.com/home/menu/irsfigures.guest.html

    I have included the raw data at the end of this post.

    What is interesting is what is signified by a person at the 50
    percentile level, which in 2000 was a little over $27,000. The Constant
    Dollars data shows that the trend through the 80's and early 90's of
    real income decay is ended.

    The key point that Rush was making in presenting this data, and which
    I've made here on occasion, is that claims by the left that the GOP is
    only for tax cuts for the rich is a false argument, because the 'rich'
    as defined by the left, are the only people who pay the taxes in the
    first place. However, one interesting thing is that this seems to have
    always been the case. The figures for 1986 show that the top 50% paid
    around 94% of all income tax. It seems to appear that welfare reform
    didn't shift so many people off the welfare roles as much as automated
    and deregulated the welfare system, as well as making it more equitable
    and progressive. You no longer have to be unemployed to be on welfare.

    Why this data is as it is can be shown by comparing the figures to the
    thresholds for the Earned Income Tax credit, which cuts off at around
    $31,000. If you aren't paying taxes, you are on welfare, is essentially
    the argument, and large percentages of the income of the top 50% is
    being redistributed via the EITC to the lower 50%.

    On the positive side, this is taking place without some onerous
    bureaucracy of social workers, means testers, and fraud investigators
    parasitizing on top. You get or give a check based on your income,
    point blank. The computer network takes care of all of it. There are no
    rules that disqualify you if you own a car or have some savings or
    investments, or are self employed.

    On the negative side, it imposes a stark polarity onto society that
    translates to the political arena. If you get a check from the
    government, and you have dependents, you are more likely to vote for
    the candidates that are going to keep that money coming in. If you pay
    a check to the government, you are more likely to vote for candidates
    that are going to minimize that check as much as possible.

    With the 50 percentile level at $27,000 and the cutoff for the EITC
    around $4,000 higher than that, this means that more than 50% of
    American workers are on welfare. This bodes ill for libertarian hopes
    when more than half the populace is on the government dole.

    What is also interesting is that the top 1% pay about a third of all
    income taxes. They can't help but benefit the most from tax cuts,
    unless a tax cut is unfairly targeted to only to expand that 53% that
    is on welfare and paying no income taxes whatsoever.

    It is a fine box that tax cutters are in. If you evenly apply a tax
    cut, the rich get the most benefit, and the EITC payouts to the sub-53%
    may get reduced. If you cut other taxes, like the payroll tax (i.e.
    social security), you get whacked for messing with the 'third rail of
    American politics' and you still come out looking like a meany, picking
    on old people.

    Given that there is no longer a surplus, the idea of any tax cut
    passing has zero glide time. It is mated on the strategy board until
    such time as the rook of revinues backs off once again, and technology
    provides expanding revinue pictures once again. The fact that so few
    businesses are upgrading their systems and software (and so little new
    versions of software provide any measurable productivity increases)
    bodes ill for this possibility in the near future.

    Ah, dynamic scoring, you say. The difficulty is that dynamic scoring
    presents an ever expanding locus of possible future revinues, as anyone
    who viewed the coverage of the congressional tax cut hearings in 2001
    can attest. Furthermore, it can't fortell future events like 9/11,
    which has rather seriously changed the entire revinue dynamic for years
    to come. It also has difficulty dealing with false data in the market,
    like Enron. Who thinks they are the Muad'dib who can sift the timelines
    to find the true future?

    Read on..

    Mike Lorrey
    "Tax is slavery" - Mike Lorrey

    Income Tax: Who Pays? IRS Figures for 2000
    Table 1. - Individual Income Tax Returns with Positive Adjusted Gross
    Income (AGI): Number of Returns, Shares of AGI andTotal Income Tax, AGI
    Floor on Percentiles in Current and Constant Dollars, and Average Tax
    Rates, by Selected Descending Cumulative Percentiles of Returns Based
    on Income Size Using the Definition of AGI for Each Year, Tax Years
    1986-2000 [All figures are estimates based on samples]
    Descending cumulative percentiles

    Year: Total.....Top 1%.....Top 5%.....Top 10%.....Top 25%.....Top 50%

    Number of returns: [1]
    1986:
    102,087,623...1,020,876..5,104,381..10,208,762..25,521,906..51,043,811
    1987:
    106,154,761...1,061,548..5,307,738..10,615,476..26,538,690..53,077,380
    1988:
    108,872,859...1,088,729..5,443,643..10,887,286..27,218,214..54,436,429
    1989:
    111,312,721...1,113,127..5,565,636..11,131,272..27,828,181..55,656,361
    1990:
    112,812,262...1,128,123..5,640,613..11,281,226..28,203,066..56,406,132
    1991:
    113,804,104...1,138,041..5,690,205..11,380,410..28,451,026..56,902,052
    1992:
    112,652,759...1,126,528..5,632,638..11,265,276..28,163,190..56,326,380
    1993:
    113,681,387...1,136,814..5,684,069..11,368,139..28,420,347..56,840,694
    1994:
    114,989,920...1,149,899..5,749,496..11,498,992..28,747,480..57,494,960
    1995:
    117,274,186...1,172,742..5,863,709..11,727,419..29,318,546..58,637,093
    1996:
    119,441,767...1,194,418..5,972,088..11,944,177..29,860,442..59,720,884
    1997:
    121,503,284...1,215,033..6,075,164..12,150,328..30,375,821..60,751,642
    1998:
    123,775,831...1,237,758..6,188,792..12,377,583..30,943,958..61,887,915
    1999:
    126,008,974...1,260,090..6,300,449..12,600,897..31,502,244..63,004,487
    2000:
    128,227,143...1,282,271..6,411,357..12,822,714..32,056,786..64,113,572

    Adjusted gross income floor on percentiles (current dollars):
    1986: N/A......118,818......62,377......48,656......32,242......17,302
    1987: N/A......139,289......68,414......52,921......33,983......17,768
    1988: N/A......157,136......72,735......55,437......35,398......18,367
    1989: N/A......163,869......76,933......58,263......36,839......18,993
    1990: N/A......167,421......79,064......60,287......38,080......19,767
    1991: N/A......170,139......81,720......61,944......38,929......20,097
    1992: N/A......181,904......85,103......64,457......40,378......20,803
    1993: N/A......185,715......87,386......66,077......41,210......21,179
    1994: N/A......195,726......91,226......68,753......42,742......21,802
    1995: N/A......209,406......96,221......72,094......44,207......22,344
    1996: N/A......227,546......101,141.....74,986......45,757......23,174
    1997: N/A......250,736......108,048.....79,212......48,173......24,393
    1998: N/A......269,496......114,729.....83,220......50,607......25,491
    1999: N/A......293,415......120,846.....87,682......52,965......26,415
    2000: N/A......313,469......128,336.....92,144......55,225......27,682

    Adjusted gross income floor on percentiles (constant dollars): [2]
    1986: N/A......108,411......56,913......44,394......29,418......15,786
    1987: N/A......122,614......60,224......46,585......29,915......15,641
    1988: N/A......132,828......61,484......46,861......29,922......15,526
    1989: N/A......132,152......62,043......46,986......29,709......15,317
    1990: N/A......128,096......60,493......46,126......29,135......15,124
    1991: N/A......124,919......60,000......45,480......28,582......14,756
    1992: N/A......129,654......60,658......45,942......28,780......14,828
    1993: N/A......128,522......60,475......45,728......28,519......14,657
    1994: N/A......132,069......61,556......46,392......28,841......14,711
    1995: N/A......137,406......63,137......47,306......29,007......14,661
    1996: N/A......145,026......64,462......47,792......29,163......14,769
    1997: N/A......156,222......67,320......49,353......30,014......15,198
    1998: N/A......164,427......69,999......50,775......30,877......15,553
    1999: N/A......176,119......72,537......52,630......31,792......15,855
    2000: N/A......182,038......74,527......53,510......32,070......16,075

    Adjusted gross income (millions of dollars):
    1986:
    2,524,124...285,197...608,467...886,510......1,490,173......2,103,569
    1987:
    2,813,728...346,635...722,221...1,038,221....1,709,389......2,373,869
    1988:
    3,124,156...473,527...890,702...1,232,536....1,950,860......2,657,865
    1989:
    3,298,858...468,079...918,421...1,286,539....2,054,478......2,805,235
    1990:
    3,451,237...483,252...953,337...1,338,032....2,144,177......2,932,537
    1991:
    3,516,142...456,603...943,350...1,343,202....2,174,765......2,984,003
    1992:
    3,680,552...523,586...1,031,093.1,443,784....2,299,401......3,131,400
    1993:
    3,775,578...520,586...1,048,252.1,474,463....2,357,953......3,212,299
    1994:
    3,961,146...546,700...1,103,084.1,552,205....2,481,074......3,371,352
    1995:
    4,244,607...619,610...1,222,723.1,704,513....2,689,820......3,627,542
    1996:
    4,590,527...736,545...1,393,805.1,909,149....2,952,637......3,944,383
    1997:
    5,023,457...872,826...1,597,107.2,151,401....3,267,600......4,327,992
    1998:
    5,469,211..1,010,245..1,796,647.2,393,716....3,589,600......4,721,430
    1999:
    5,909,329..1,152,820..2,011,763.2,652,835....3,927,308......5,126,164
    2000:
    6,423,977..1,336,773..2,267,403.2,955,386....4,313,786......5,589,755

    Descending cumulative percentiles
    Year: Total.....Top 1%.....Top 5%.......Top 10%....Top 25%....Top 50%

    Total income tax (millions of dollars): [3]
    1986:
    366,979......94,491......156,240......200,703......278,976......343,289
    1987:
    369,046......91,559......159,642......205,230......283,857......346,655
    1988:
    412,761......113,841......188,303......236,411......321,297.....389,145
    1989:
    432,838......109,259......190,188......241,458......334,258.....407,599
    1990:
    447,061......112,338......195,088......247,514......344,340....421,075
    1991:
    448,349......111,267......194,480......250,282......346,511.....423,759
    1992:
    476,163......131,156......218,479......276,213......373,700.....452,070
    1993:
    502,720......145,836......238,083......297,808......398,516.....478,563
    1994:
    534,754......154,337......254,106......317,902......425,402.....509,256
    1995:
    588,331......178,035......287,741......357,402......472,808.....561,225
    1996:
    658,124......212,626......335,433......411,404......535,164.....629,684
    1997:
    727,303......241,239......377,241......459,639......594,007.....696,161
    1998:
    788,452......274,009......424,506......512,836......651,964.....755,240
    1999:
    877,292......317,419......486,464......583,002......732,890.....842,168
    2000:
    980,521......366,929......553,670......660,150......823,706.....942,179

    Average tax rate (percentage): [4]
    1986: 14.54......33.13......25.68......22.64......18.72......16.32
    1987: 13.12......26.41......22.10......19.77......16.61......14.60
    1988: 13.21......24.04......21.14......19.18......16.47......14.64
    1989: 13.12......23.34......20.71......18.77......16.27......14.53
    1990: 12.95......23.25......20.46......18.50......16.06......14.36
    1991: 12.75......24.37......20.62......18.63......15.93......14.20
    1992: 12.94......25.05......21.19......19.13......16.25......14.44
    1993: 13.32......28.01......22.71......20.20......16.90......14.90
    1994: 13.50......28.23......23.04......20.48......17.15......15.11
    1995: 13.86......28.73......23.53......20.97......17.58......15.47
    1996: 14.34......28.87......24.07......21.55......18.12......15.96
    1997: 14.48......27.64......23.62......21.36......18.18......16.09
    1998: 14.42......27.12......23.63......21.42......18.16......16.00
    1999: 14.85......27.53......24.18......21.98......18.66......16.43
    2000: 15.26......27.45......24.42......22.34......19.09......16.86

    Adjusted gross income share (percentage):
    1986: 100.00......11.30......24.11......35.12......59.04......83.34
    1987: 100.00......12.32......25.67......36.90......60.75......84.37
    1988: 100.00......15.16......28.51......39.45......62.44......85.07
    1989: 100.00......14.19......27.84......39.00......62.28......85.04
    1990: 100.00......14.00......27.62......38.77......62.13......84.97
    1991: 100.00......12.99......26.83......38.20......61.85......84.87
    1992: 100.00......14.23......28.01......39.23......62.47......85.08
    1993: 100.00......13.79......27.76......39.05......62.45......85.08
    1994: 100.00......13.80......27.85......39.19......62.64......85.11
    1995: 100.00......14.60......28.81......40.16......63.37......85.46
    1996: 100.00......16.04......30.36......41.59......64.32......85.92
    1997: 100.00......17.38......31.79......42.83......65.05......86.16
    1998: 100.00......18.47......32.85......43.77......65.63......86.33
    1999: 100.00......19.51......34.04......44.89......66.46......86.75
    2000: 100.00......20.81......35.30......46.01......67.15......87.01

    Total income tax share (percentage):
    1986: 100.00......25.75......42.57......54.69......76.02......93.54
    1987: 100.00......24.81......43.26......55.61......76.92......93.93
    1988: 100.00......27.58......45.62......57.28......77.84......94.28
    1989: 100.00......25.24......43.94......55.78......77.22......94.17
    1990: 100.00......25.13......43.64......55.36......77.02......94.19
    1991: 100.00......24.82......43.38......55.82......77.29......94.52
    1992: 100.00......27.54......45.88......58.01......78.48......94.94
    1993: 100.00......29.01......47.36......59.24......79.27......95.19
    1994: 100.00......28.86......47.52......59.45......79.55......95.23
    1995: 100.00......30.26......48.91......60.75......80.36......95.39
    1996: 100.00......32.31......50.97......62.51......81.32......95.68
    1997: 100.00......33.17......51.87......63.20......81.67......95.72
    1998: 100.00......34.75......53.84......65.04......82.69......95.79
    1999: 100.00......36.18......55.45......66.45......83.54......96.00
    2000: 100.00......37.42......56.47......67.33......84.01......96.09

    N/A-- Not applicable.
    [1] The number of returns with negative adjusted gross income, i.e.,
    returns with an adjusted gross deficit, and the corresponding amounts
    for adjusted gross deficit, were excluded from Table 1. By excluding
    deficit returns, alternative minimum tax reported on some of these
    returns was also excluded. For Tax Year 2000, there were 5,714 returns
    with no adjusted gross income that reported income tax, mostly
    alternative minimum tax, totaling $100.6 million.
    [2] For Table 1, constant dollars were calculated using the U.S. Bureau
    of Labor Statistics' consumer price index for urban consumers (CPI-U,
    1982-84=100). For 2000 the CPI-U = 172.2
    [3] Total income tax is the sum of income tax after credits and
    alternative minimum tax reported on returns that showed a positive
    amount for adjusted gross income. Therefore, total income tax excludes
    alternative minimum tax, Form 8814 tax (tax on a child's interest or
    dividends), and Form 4972 tax (tax on lump-sum distributions from
    qualified retirement plans) reported on some returns with a negative
    amount for adjusted gross income. See also footnote 1.
    [4] The average tax rate was computed by dividing total income tax (see
    footnote 3) by (positive) adjusted gross income.

    Note: Unles otherwise stated, money amounts are in current (not
    constant) denominations.

    Source: Internal Revenue Service, Statistics of Income Division,
    Unpublished Statistics, September 2002.

    =====
    Mike Lorrey
    "Live Free or Die, Death is not the Worst of Evils."
                                                         - Gen. John Stark
    "Pacifists are Objectively Pro-Fascist." - George Orwell
    "Treason doth never Prosper. What is the Reason?
    For if it Prosper, none Dare call it Treason..." - Ovid

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