Top Ten Tax Charts

April 14, 2011 at 5:46 pm

With the April 18 tax filing deadline fast approaching, we’ve assembled these charts to provide a big-picture look at the U.S. tax system.

The United States Is a Low-Tax Country

Federal Income Taxes on Average Families are Historically Low

Corporate Tax Revenues are Historically Low

Effective Tax Rates on Wealthiest People have Fallen Dramatically

Bush Tax Cuts Tilted Heavily Towards the Top

Rise in Debt Could Be Sharply Slowed - Over Next Decade - By Letting Bust Tax Cuts Expire

Tax Ependitures are Substantial

Income Gains at the Top Dwarfed those of Low and Middle Income Households

Top 1 Percent's Share of Total After Tax Income Has More than Doubled Over the Past Thirty Years

Most of Budget Goes Toward Defense, Social Security, and Major Health Programs

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33 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Jack Asstride #
    1

    Found this site quite by accident, after reading lots of comments on the web about how wealth is concentrated in “the top 1%”.

    What’s the easiest way to figure out how much better off we would be as a nation if we just confiscated 100% of the top 1%’s wealth? I’m sure they’d get it back soon enough, they got it the first time, right?

    I see lots of %’s, but little $$$! What’s the $ value of that top 1%, divided by the bottom 47%.

    Lots of silly #s spread across the web, but let’s play with a handful snagged from various random examples.

    There’s 1.4 millions of people “in the work force” for the 1%, and 65.8 millions for the 47%. Supposedly the 1% have an average $14 M in assets, for $19.6 Trillions of dollars. Take out $15 T for US debt, and that leaves about $70k for every one of the 47%.

    The solution seems clear: Eat the rich. Redistribution is the wonderful equalizer. Everybody (other than the 1%) would benefit, including the remaining 52% – in that the debt would be totally flat, greatly reducing the need for taxes from those lucky 52%. The economy would get a tremendous spike from the sudden liquidity. Government revenue from sales taxes would increase tremendously. Local government revenue from real estate taxes would sky-rocket. Trade would be up, production would be up. Social programs could spend like sailors. WIN! All around WIN!!

    How long would it take before we were screwed again?

  2. Barry R. #
    2

    I don’t know about the rest of the charts, but the top one is unintentionally deceptive in a variety of ways. 1) The higher tax countries probably for the most part pay for the vast majority of medical costs, whereas the US has a mixture of governmental and non-governmental payments (group insurance, private insurance, out of pocket payments). The non-governmental portion of that are obviously not taxes, but they are still real expenses, and reduce the ability of people in the US to pay taxes. (2) The very high cost of medical care in this country is, as best I can tell, counted as part of our GDP, which would inflate it considerably in comparison to more rational systems. (3) The same problem of additional cost to taxpayers due to our mix of taxpayer and privately-borne expenses also applies to provisions for retirement and post-secondary education. Our system again has real non-tax costs for citizens for services that presumably come out of tax dollars in the higher tax countries.

    You could argue that the non-tax costs I mention in points one and three could be more efficiently borne through additional taxes and expanded government expenditures, and I might even agree with you, but the fact of the matter is that currently those expenses are carried by taxpayers, directly or indirectly, in addition to their tax burden, and they reduce the disposable income of taxpayers, and thus their ability to sustain additional taxes.

    This isn’t an oranges to oranges comparison.

    • Barry R. #
      3

      The more I read through these charts, the more I feel that there is a lot of whistling in the dark going on here, and I hope policy-makers aren’t taking them seriously. One part of the message from them is quite accurate. Wealthy people in the US are not paying their fair share. Unfortunately, fixing that is not a matter of waving a wand and making it so. Much of modern health comes from influence on government policy in the first place and that influence is unlikely to disappear when it comes to tax-raising time. Inevitably, in spite of the rhetoric about taxing the rich, tax raises fall primarily on the middle class.

      Can the middle class sustain more taxes? GDP comparisons don’t tell you much there. You would need to look at wages versus current expenses, debt level, retirement savings needs, etc. I suspect that if you look at those factors, much of the middle class is running just about flat out, with levels of debt that are very close to unsupportable. In that environment, higher middle class taxes would lead to increased mortgage defaults, increased personal bankruptcies and drastically reduced ability to consume, with all of the implications that has for the economy. I know quite a few 50-something people with $50,000+ in credit card debt, zero or negative equity in their house, and zero long-term savings. They may have been foolish to get in that situation, but in it they are. They are not in a position to pay additional taxes.

  3. JulieS #
    4

    To SG – you’re in the 1% and don’t have any tax shelters? How about your mortgage exemption? If you’ve been deducting the interest on your million dollar home then Uncle Sam just gave you $50,000 that’s far more than any low income folks are getting.

  4. Frank Goffena #
    5

    If you are trying to make the case for raising more taxes, I don’t care what your charts say. don’t you think we are taxed enough already? Our debt is not a tax problem, it is a spending problem. It doesn’t really matter who pays what share, in the end it all comes out in the wash. If you raise taxes on the wealthy, they will not have the disposable income to buy products and services that they would have otherwise bought, which will negatively effect business and jobs. If you raise taxes on businesses, they will raise their prices to cover the costs, which will negatively effect prices. If you tax the middle class, they will not be able purchase products and services, which will negatively effect business. So her’s the deal: Why not just make the tax code simpler, so that everyone knows who is paying what, and it doesn’t drain billions out of our economy to comply with. The FAIRTAX is the solution. It taxes all consumption above the poverty level. If we had the FAIRTAX, we wouldn’t be going over these confusing stats that only show part of the picture, trying to figure out who should pay more and who’s getting screwed, and we also would not be wasting our time and energy trying to comply with a tax code that even the IRS can’t even explain!

  5. 6

    selective and variable taxation has corruption built in. the rich buy politicians with money, the politicians buy support with benefits. a single tax on every transaction would clean up politics, release business from taxation costs, and end the distortions in use of wealth.

    but it would make politicians obsolete, so they won’t be leading this change to rational and just society.

  6. 7

    As an aside, the “% inc. in after tax dollars” Bush Tax cut graph is a bit misleading. As is so often stated, correctly, the top percentiles pay an absolute majority of the taxes, so they should probably benefit the most from a tax cut. The 30-40K taxpayer doesn’t actually pay much, if anything, so the % should be less. I think everyone over 18 should get a tax bill, every year, even if it’s like only 50 bucks. Everyone needs to be vested in the system. Every if you collect welfare or disability, you pay that minimum tax bill.

  7. Sara P. #
    8

    The Federal government receives our taxes to pay (or help pay) for Social Security;. The Federal Government gets nothing back from foreign wars. The money spent there is blown up, wasted, pays for soldiers, etc.

    So, how can these two expenditures be considered equal. Shouldn’t some allowance be made for the fact that even the ill-paid lowest wage earner pays FICA?

    Isn’t there a difference in these two expenditures?

  8. 9

    It would be really nice if these included State and Local taxes somehow. I know if I pass this on to my anti-tax friends, they will claim that State and Local taxes are increasing (which I assume is true because the Feds have shifted many costs to the states).

    When comparing international taxes, isn’t it possible that the comparison isn’t good because some other countries don’t have state and local taxes or the local taxes aren’t as significant?

    • Kenneth Thomas #
      10

      These figures do include taxes at all levels of government, as is also true at the OECD link I posted in comment #14.

      The chart posted here actually includes more than tax revenue. For example, the chart says Norway’s total government receipts are about 55% of GDP, but if you look at my link you’ll see that Norway’s total tax revenue is only 41% of GDP. The difference is mainly oil revenue, I’d imagine — it owns 2/3 of Statoil. In fact, Sweden, Denmark and a number of other countries have higher levels of tax as a percentage of GDP than Norway does. Among OECD countries, only Mexico and Chile tax less than the US’s 24% of GDP.

  9. James #
    11

    The last comment might make sense if it weren’t for two facts:
    1) It assumes that a company doesn’t already make a profit. Hence it is forced to raise prices and
    2) It has no competitors that may undercut its new, presumably higher taxes.
    Let’s not forget we live in a real world-not the world of your theoretical assumptions…

  10. Jeff Ho #
    12

    I’m not sure if you simply cannot add or have an agenda. Anyone who has a w2 can see that income taxes only make up about half of what the government takes from us. When Social Security, Medicare and all the other deductions are added up, most people would be lucky to take home 60% of what they earn.

    Also let’s not compare ourselves with countries such as Norway and Sweden but with who our real competition is – the emerging Asian nations where all our jobs are going. A transfer of jobs is a transfer of real wealth which is why the standard of living and quality of life have risen in those countries while ours has declined. Let’s look at how much workers in Hongkong, Singapore and Taiwan pay in taxes. Do they pay any capital gains taxes?

  11. Tim #
    13

    Can you explain “Tax Expenditures”? Is that what individuals and corporations actually pay? Or what they avoid paying?

    • CBPP #
      14

      A tax expenditure is revenue loss from a tax provision that provides a special benefit to a group of taxpayers. These can come in the form of exclusions from income (e.g. employer provided health insurance) or from itemized deductions (e.g. home mortgage interest), for example. Such tax expenditures are very large and many, in our view, are poorly designed and ripe for reform as we discussed in a recent paper.

  12. TMoss #
    15

    When a corporation pays taxes…it pays those taxes on to consumers. As long as you don’t purchase their products or care about their employees, go ahead an tax without compunction. Also, if you won a 401K you likely invested in an oil company…

    • jimspy #
      16

      In reply to #7…assuming you meant “PASSES those taxes on to consumers”… this is true. And was just as true in the early 1950s, when we seemed to have a healthy economy. So it doesn’t seem to be a bad thing.

    • Jonathan Menes #
      17

      Consumers typically pay part but not all the corporate tax. Corporations pass on a part of the cost to the stockholders Of course, the anti-tax flat tax people argue that it is all paid by stockholders since they argue that the corporate tax is double taxation. The question of who pays depends upon the slopes the demand and supply curves.

    • Mike #
      18

      I’ll assume you meant “it passes those taxes on…” Well, in the ‘free-market’ system, those corporations which are most efficient are supposed to be able to earn customers. Obviously current ‘free-market’ cries do not apply when they can be bypassed with that hypocritical argument when corps can bypass that ideal and further their monopolies. The 401k investments in oil companies is also a tired, failed argument. The ‘everyone is involved in destructive yet profitable commerce so why shouldn’t I’ is juvenile, Ayn Rand-ish thinking. Corporations should man up and be responsible to society, just like everyone else.

  13. Kenneth Thomas #
    19

    The chart for “tax revenue” appears to be total government revenue instead. According to the OECD interactive revenue tables (http://stats.oecd.org/Index.aspx?DataSetCode=REV), total tax revenue for all levels of government in the U.S. was only 24.0% of GDP in 2009, yet your chart has it over 30%. This means your chart includes government revenue beyond tax revenue, such as tuition at state universities like mine (University of Missouri-St. Louis). Obviously the U.S. is a low-tax country, but you need a chart that includes only taxes.

  14. steve boggio #
    20

    Is there any historic data that you can make avaiable on the $ aamounts of tax cuts given, so we can see what did and didn’t trickle down?

  15. Jeanne Karpenko #
    21

    Thank you – visuals are the only way to grasp all these complications. Again SS is not contributing to the debt.

    • Jeanne Karpenko #
      22

      Visuals wonderful – how can people dispute those trends.

  16. BruceF #
    23

    SS should not be a budget item, but the fact the government borrowed from SS and now needs to pay it back, it should be listed since it is an ongoing expense.

    • Sara P. #
      24

      That sounds reasonable,but wars are an on-going expense, too.

  17. 25

    Great job on the charts!

    Suggestion: The concentration in wealth in the top 1% is clearer if you show assets, in part because AGI for top-earners understates actual income due to tax shelters. It would be nice to add that.

    Thanks again.

    • SG #
      26

      Being in the top 1% I would like to be able to participate in all of these so called tax shelters that you discuss. The tax loopholes and deductions are not for the top 1% but rather the rest of the population. We at the top are contributing more but don’t qualify for the programs that we are funding. A simple thank you will suffice.

      • criticalist #
        27

        i just don’t feel like saying “thank you” to the top 1%. I’m sure you understand… I mean, you do pay just 10% more in federal income tax than somebody making $40k annually. That turns into a regressive tax when most of the latter’s income is spent on necessities. That is the true penalty.

        • CS #
          28

          I may not be in the top 1% but I do pay a substantial amount of taxes. I would like to know where the loopholes are myself, maybe I could get my fed tax down from 23K a year. While not in the top 1% or really that close, we are still in the bracket where things like child tax credits, IRA tax incentives, etc are either gone or so little to not matter. I would just like to be able to meet the full funding on my 401K but cannot as those in lower income levels opt out which reduces my ability to fund my account. I don’t think the top 1% pay just 10% more than the next to nothing someone at 40K pays. The real tax rate for someone at 40K is about 10% or so at the most which is what less then 4K a year while someone in the upper rate making 300K a year is paying close to 90K or more. Your math is way off.

  18. Neophyte #
    29

    Could you add the quintile series to the effective tax rates chart?

  19. Geoff #
    30

    Thanks for sharing. It’s helpful to see the trend since the enclosure movement began in full force in the 40s. Could you add in more historical information — going back prior to the rise of the military-, education-, and healthcare-industrial complexes? Perhaps starting in 1800?

  20. ken melvin #
    31

    Social Security should not be considered as a budget item.

    • david #
      32

      Indeed, SS is not a budget item.

    • 33

      I’ve always said that if I could have everything I put in S.S. back compounded at 4 or 5% you could keep my monthly payment. When call S.S. an entitlement when I paid for it!!!!


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