TAXES OF THE RICH AND FAMOUS….Ezra Klein is doing tax wonkery over at his place, and I can’t let him have all the fun. So just for the record, here’s a look at effective federal tax rates in general:
Not very progressive! Add in state and local taxes and it would look flatter still. And just to remind everyone of exactly what that “Top 400 Taxpayers” segment at the far right looks like, here are the pinkos over at the Wall Street Journal to explain it to you:
The top 400 taxpayers have greatly increased their share of individuals’ income since the mid-1990s. The group accounted for 1.15% of total income in 2005….more than twice as large as its 0.49% share a decade earlier.
….The average federal income-tax rate for the group was 18.23%….well below the average income-tax rate of nearly 30% back in 1995, when Bill Clinton was in the White House.
So there you have it. The top 400 taxpayers, a group so rich and elite that I’d need scientific notation to properly represent their proportion of the population, have doubled their share of income in the past decade or two but have decreased their tax burden by nearly half. Nice work! As you can see, Warren Buffett wasn’t exaggerating when he said his secretary paid a higher tax rate than he does. If she pays more than 18% — not exactly a tough hurdle when you figure that payroll taxes already account for about 8% of that — she probably does.
UPDATE: So how do the rich do it? Jonathan Stein interviews David Cay Johnston here to find out.