Last week, the Internal Revenue Service released data on distribution of the income tax burden in 2002. They put a lie to John Kerry's contention that the rich are not paying their fair share and should be taxed more.
The IRS data divide taxpayers into percentiles according to their adjusted gross incomes. Following is the share of aggregate income taxes paid by each group:
Income Group ---- Tax Share
Top 1 percent ---- 33.7 percent
Top 5 percent ---- 53.8 percent
Top 10 percent ---- 65.7 percent
Top 25 percent ---- 83.9 percent
Top 50 percent ---- 96.5 percent
The data also reveal that despite the Bush tax cuts, the income tax is still highly progressive -- taking more from each group as their incomes rise. The following percentages measure the taxes paid by each group divided by their income. Economists call this the average or effective tax rate.
Income Group ---- Tax Rate
Top 1 percent ---- 27.25 percent
Top 5 percent ---- 22.95 percent
Top 10 percent ---- 20.51 percent
Top 25 percent ---- 16.99 percent
Top 50 percent ---- 14.66 percent
Bottom 50 percent ---- 3.21 percent
Finally, the data show that the rich are not only paying tax rates as high as they were during the Clinton administration, eve after large tax cuts in 2001 and 2002, but they are doing so even as their incomes have fallen. The aggregate income of the top 1 percent was down 26 percent between 2000 and 2002. In 2000, the income threshold for getting into the top 1 percent was $313,469. By 2002, that figure had fallen to $285,424, reflecting the slow economy and weak stock market.
This doesn't mean we should shed tears for the rich. They're still doing pretty well. But these data raise serious questions about Kerry's class warfare agenda. How much more taxes does he think rich people should pay?
Poll data suggest that the wealthy are already paying more than the bulk of Americans think they should. A Zogby poll last year asked people what a fair tax rate would be for a person making $1 million per year -- an income that would put someone in the top tenth of the top 1 percent of taxpayers. Seventeen percent of Americans said that 10 percent was the most he should pay and 29 percent said that 20 percent was the maximum.
In other words, 46 percent of the American people think that millionaires today are already overtaxed, paying about 28 percent of their income to the federal government when 20 percent is the most they ought to pay. Only 21 percent of people in the survey agreed with Kerry that tax rates should be higher than 30 percent.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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