The ‘One Percent’ Pay More in Taxes — and Their Incomes Have Fallen
Since this whole Occupy, income-inequality conversation took center stage last year, we’ve heard over and over again that the rich, the so-called “One Percent”, pay less in taxes than everyone else despite the fact that their income levels are at all-time highs.
Is this true? A new report from the Congressional Budget Office would say “not exactly.” http://www.cbo.gov/publication/43373
Let’s consider income first. Between 2007 and 2009, after-tax earnings by Americans in the top one percent for income fell 37 percent. On a pre-tax basis they fell 36 percent in the same period.
That may sound like a minor haircut for One Percenters compared to people who lost their jobs. But when you take into account federal transfers, assistance and taxes paid, the incomes of the bottom 20 percent grew by 3 percent, while it fell a modest 2 percent for the middle 20 percent..
Translation: Since the start of the recession, the wealthy have seen their incomes fall 18 times more than the incomes of the middle class.
Image courtesy CNBC
The result of this big drop at the top was that their share of the country’s total income also fell. In 2007, the top one percent earned 16.7 percent of all after-tax income. In 2009, that portion fell to 11.5 percent.
Inequality, in other words, fell during those years. We are now in an age of High-Beta Wealth where the incomes of the One Percent have become far more manic and prone to wild drops than the rest of the country.
<a href="http://ad.doubleclick.net/jump/prnd/prn-theblaze;prntyp... target="_blank" ><img src="http://ad.doubleclick.net/ad/prnd/prn-theblaze;prntype=w... border="0" alt="" /></a>Okay, fine. But what about taxes paid?
Would you believe me if I told you that although tax-rates for the “One Percent” are at historic lows, the actual amount paid in taxes is higher than it was before the recession?
Image courtesy CNBC
The One Percent paid an average effective tax rate of 28.9 percent on their income far more than any other group, and more than twice the average effective rate of the middle class, who paid 11 percent on average.
So the rich lost more income and paid more of their money in taxes than the rest of the population.
Bottom line: We can argue back and forth about the benefits of taxing the wealthy [one side arguing that it’s about “equality” while the other argues about job creation], but facts are the facts. The “Once Percent” has seen its income fall and pays more in actual taxes than before the recession.
“When politicians and pundits talk about the rich just getting richer and paying less taxes, they need to pay closer attention to the actual numbers,”
Tommy Newberry (in his book, The War on Success) chronicled the story of a Texas Tech economics professor who, “failed his entire class.” THIS is the result when you don't allow a free people to strive to reach their FULL potential:
“After listening to his students argue vociferously that socialism creates a fairer, more just society, the professor tried an experiment. He announced that test grades henceforth would be determined by averaging all the students’ grades—in other words, every student would get the same grade.
The class averaged a low ‘B’ on the first test. The result disappointed a handful of students who had studied hard and thought they had earned an ‘A,’ but others who didn’t study at all were quite pleased. On the next test, the class average dropped by a steep twelve points to a low ‘C.’ This severely upset the good students, sparked tension between them and the students who didn’t study.
The class average sunk to a ‘D’ on the next test, angering even the worst students, who had grown accustomed to ‘B’s’ and ‘C’s.’ The high-achieving students became so disengaged that they largely skipped the last two weeks of class. Thus, n...
Tommy Newberry (in his book, The War on Success) chronicled the story of a Texas Tech economics professor who, “failed his entire class.” THIS is the result when you don't allow a free people to strive to reach their FULL potential:
“After listening to his students argue vociferously that socialism creates a fairer, more just society, the professor tried an experiment. He announced that test grades henceforth would be determined by averaging all the students’ grades—in other words, every student would get the same grade.
The class averaged a low ‘B’ on the first test. The result disappointed a handful of students who had studied hard and thought they had earned an ‘A,’ but others who didn’t study at all were quite pleased. On the next test, the class average dropped by a steep twelve points to a low ‘C.’ This severely upset the good students, sparked tension between them and the students who didn’t study.
The class average sunk to a ‘D’ on the next test, angering even the worst students, who had grown accustomed to ‘B’s’ and ‘C’s.’ The high-achieving students became so disengaged that they largely skipped the last two weeks of class. Thus, no one was surprised when the class flunked the final exam.
In the end, despite the poor grades, the students learned a good lesson: When you try to prevent failure, no one really succeeds. When you try to make everyone a winner, you just create more losers.”
ref: Tommy Newberry, The War on Success, (Washington, DC: Regnery Press, 2010), p. 112-3.