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The Official Blog of National Taxpayers Union

Tax Share of Richest Hits New Record

Posted by David Keating - September 22, 2006

New data released by the IRS shows the tax shares have hit a new record for the top 5% of income taxpayers and is the second highest ever for the top 1% of income taxpayers.

Of course, in 2003 Congress accelerated the income tax rate cuts and opponents criticized it as a giveaway to the rich. Well, now they are paying more of the income tax than ever.

Total income tax share (percentage):
Year     Top 1%   Top 5%
1986    25.75    42.57
1987    24.81    43.26
1988    27.58    45.62
1989    25.24    43.94
1990    25.13    43.64
1991    24.82    43.38
1992    27.54    45.88
1993    29.01    47.36
1994    28.86    47.52
1995    30.26    48.91
1996    32.31    50.97
1997    33.17    51.87
1998    34.75    53.84
1999    36.18    55.45
2000    37.42    56.47
2001    33.89    53.25
2002    33.71    53.80
2003    34.27    54.36
2004    36.89    57.13

Thoughts?   Add Comment -


Confused said on Sep 22 2006 at 12:23pm
I thought the Bush tax cuts were a big break for the wealthy? Oh well, I guess once again Nancy Pelosi et al are full of it.


said on Sep 22 2006 at 12:35pm
The tax cuts *were* a big break for the wealthy. They also increased the number of individuals who don't have to pay any taxes, or who instead of paying taxes, get a phat check from the IRS for their refundable tax credits.


Publius said on Sep 22 2006 at 4:30pm
Additional tables on who pays what share are available here, http://www.ntu.org/main/page.php?PageID=6


Joe Yangtree said on Sep 25 2006 at 8:11pm
Your figures only tell part of the story. Paying a higher percentage of the taxes makes perfect sense if you're taking in a higher percentage of the overall money. Here's an example:

I make $2000 in 2003 and Mark makes $1000. I pay $400 in taxes and Mark pays $100, so I made 2/3 of the money and paid 4/5ths of the taxes (my rate = 20%; Mark's is 10%). Then in 2004, I make $4000 and Mark still makes $1000. I also get a tax cut of 5%. I pay $600 and Mark pays $100. Now, I'm paying 6/7ths of the total taxes even though I was the only one that got a tax break.

What would actually tell the story of whether the top 1% and top 5% benefited more or less than other sectors would be to compare the average tax rates that they were paying from year to year. Now where could we get such a thing as that? How about the very document

http://www.irs.gov/pub/irs-soi/04in05tr.xls

that this report is based on. It has an average tax rate table and here's what it shows:

top 1% top 5% top 10% top 25% top 50%
2002: 27.25% 22.95% 20.51% 16.99% 14.66%
2003: 24.31% 20.74% 18.49% 15.38% 13.35%
2004: 23.49% 20.67% 18.60% 15.53% 13.51%
Benefit: 3.76% 2.28% 1.91% 1.46% 1.15%

So, to summarize, the top 1% and top 5% have seen their average tax rate FALL for the past 3 years and have seen it fall by a greater percentage than any other sector. The top 10%, 25%, and 50% saw it fall in 2003 and rise in 2004.

In addition, it should be remembered that the largest tax breaks that Bush instituted were on capital gains and estate taxes. These unquestionably helped the richest sectors inordinately.