(H/T – Allahpundit)
Scott A. Hodge of the Tax Foundation pointed out that the tax burden in the United States during the mid-2000s (specifically, 2005) was the most-progressive in the industrialized world. Specifically, while the richest 10% of Americans had, according to the OECD, 33.5% of the market income (3rd in the industrialized world), they paid 45.1% of the taxes (highest in the industrialized world). For those of you wondering, the tax take includes both income and social insurance taxes (and judging by the numbers, also state/local taxes). To put it another way, those in the top 10% paid a ratio of taxes to income of 1.35, easily the highest among industrialized nations, and far higher than the average of 1.11.
Further, during his testimony to Congress last week, Hodge pointed out that, again according to the OECD, low-income Americans had the lowest tax burden of any industrialized nation.
Let’s relate that to the federal income tax. One of the things the IRS does is offer statistical releases of tax data. One series of tables breaks down the returns with a positive Adjusted Gross Income by AGI and taxes paid. In 2005, those in the top 10% of filers had 46.4% of AGI and paid 70.3% of income taxes. The ratio of taxes-to-income was 1.51. Meanwhile, the bottom 50% of filers with positive AGIs (which I note again because there are those who through various means had negatifve AGIs) had 12.8% of income and paid 3.1% of income taxes, for a taxes-to-income ratio of 0.24.
Fast forward to 2008, when once again the bottom 50% of earners had 12.8% of income. Their share of the income taxes dropped to 2.7%, reducing the taxes-to-income ratio to 0.21. Meanwhile, the top 10% saw their share of the income drop to 34.7%, but their share of the income taxes only dropped to 69.9%. That caused the taxes-to-income ratio to increase to 1.69.
