America's High Earners Pay Bigger Share of Taxes Comapred to World

[geoffrobinson]

PICKET: New book shows U.S. top earners pay larger share of taxes than any other industrialized nation - Washington Times

The United States is actually more dependent on rich people to pay taxes than even many of the more socialized economies of Europe. According to the Tax Foundation, the United States gets 45 percent of its total taxes from the top 10 percent of tax filers, whereas the international average in industrialized nations is 32 percent. America’s rich carry a larger share of the tax burden than do the rich in Belgium (25 percent), Germany (31 percent), France (28 percent), and even Sweden (27 percent).

[BarryG]

Easy, just raise taxes on everybody.

[NickTheCage]

You tin foil McCarthy hat wearing fool

Communist Manifesto Plank #2 - A heavy progressive or graduated income tax.

[BarryG]

Seriously though, considering that America has the most income inequality in the OECD it makes sense that the rich would pay a higher percentage of the total tax take than in other countries.

I wonder if the article takes VATs, local taxes, and sales taxes into account. VAT alone in other OECD countries puts a much a higher burden on low and middle income earners.

[geoffrobinson]

Seriously though, considering that America has the most income inequality in the OECD it makes sense that the rich would pay a higher percentage of the total tax take than in other countries.

I wonder if the article takes VATs, local taxes, and sales taxes into account. VAT alone in other OECD countries puts a much a higher burden on low and middle income earners.

That's the dirty little secret. If you want more revenue, you'll need a VAT.

[eldondre]

That's the dirty little secret. If you want more revenue, you'll need a VAT.

funny since VAT's make goods very expensive. most overrated tax of the modern era.

reducing income inequality is overrated, the problem is less inequality than lack of wealth production for everyone else. I'd start not by using a VAT but by eliminating the capital gains exemption and lowering (or eliminating) corporate tax. and of course, balancing the budget by slashing military spending.

[BarryG]

funny since VAT's make godos very expensive. most overrated tax of the modern era.

reducing income inequality is overrated, the problem is less inequality than lack of wealth production for everyone else. I'd start not by using a VAT but by eliminating the capital gains exemption and lowering (or eliminating) corporate tax. and of course, balancing the budget by slashing military spending.

FTR I wasn't talking about reducing inequality. Just pointing out that the inequality we have is the reason why the top earners pay a greater share of tax in the US relative to the rest of the OECD. If you look at the list of countries in the OP's link, the percentage of tax paid by the top 10% of earners correlates with the Gini coefficient. Those other countries have much higher tax rates on the rich, but the rich earn a smaller proportion of wealth in those countries. Then the VAT really hits the lower income earners.

Yes I can't understand why conservatives are obsessed with slashing the income tax, claiming this will create jobs. If they were genuine about using the tax code as a tool to create jobs they should be talking about lowering business taxes. There is no evidence that lowering tax rates on the rich creates jobs or stimulates the economy. They already have enough money to buy what they want and if the CEO takes home bigger chunk of his paycheck, that doesn't spur the business to reinvest their profits.

[eldondre]

FTR I wasn't talking about reducing inequality. Just pointing out that the inequality we have is the reason why the top earners pay a greater share of tax in the US relative to the rest of the OECD. If you look at the list of countries in the OP's link, the percentage of tax paid by the top 10% of earners correlates with the Gini coefficient. Those other countries have much higher tax rates on the rich, but the rich earn a smaller proportion of wealth in those countries. Then the VAT really hits the lower income earners.

Yes I can't understand why conservatives are obsessed with slashing the income tax, claiming this will create jobs. If they were genuine about using the tax code as a tool to create jobs they should be talking about lowering business taxes. There is no evidence that lowering tax rates on the rich creates jobs or stimulates the economy. There already have enough money to buy what they want.

well, I can see the logic of lowering taxes on the rich when the rate is 91%. FDR found that the income simply disappeared so then he turned around and raised taxes on what was left of the middle class. at this point, though, you're right...we're essentially locked into two strange versions of keynes...one that is reliant on government spending to produce economic wealth and the other with the failed suppy side theory.
some interesting stuff

At the onset of the income tax, realized gains were taxed at the same rates as other income--up to 77% during the World War I period. When the Republicans regained the White House after the war, however, the maximum capital gains rate was set at 12.5%--half the regular top rate of 25% from 1925 to 1931. The top regular rate rose to 63% in 1932, but the 12.5% top capital gains rate was briefly retained.

The onset of the Great Depression and public disillusionment with stock speculation of the Roaring Twenties, however, led to increased capital gains tax rates in the 1930s. For a short period, realized gains were taxed under a complicated schedule that taxed gains from very short-term investments in full, but excluded as much as 70% of gains from sales of assets held for more than 10 years. This system was widely criticized as unwieldy and complex, and in the early 1940s it was scrapped. For the next 25 years, taxpayers had the option of excluding half of their capital gains or paying a maximum rate of 25% (useful to those whose regular tax brackets exceeded 50%).

In the late 1960s, the special 25% maximum rate was repealed. In conjunction with other tax changes, the top capital gains rate rose to about 39% by the mid-1970s. Then in 1978, congressional Republicans joined by a substantial minority of Democrats pushed through a major capital gains tax cut. Reluctantly signed by President Carter, it lowered the top rate to 28%, by excluding 60% of realized capital gains from tax. The 1981 cut in the top regular tax rate on unearned income reduced the maximum capital gains rate even further, this time to only 20%--its lowest level since the Hoover administration.

In conjunction with sharply increased depreciation write-offs in 1981, the 1978 and 1981 capital gains tax cuts caused a proliferation of tax shelters. Unneeded, unprofitable and often empty office buildings sprung up all across the country in response to the new tax subsidies (helping set the stage for the savings and loan crisis later in the decade). Esoteric capital-gains-based tax shelters in items like collectibles, freight cars and llama breeding abounded. Tax-shelter "losses" reported on tax returns jumped from about $10 billion a year in the late seventies to $160 billion a year by 1985. And since the goal of most of the shelters was not only to defer taxes, but to convert ordinary income into lightly-taxed gains, reported capital gains jumped as well.

Capital gains

and of course the point relevant to what I mentioned upthread

The heart of the case for a capital gains tax break is that it supposedly encourages savings, investment, jobs and economic growth. And that case is astonishingly weak. Just look at what happened when capital gains taxes were cut in the past...Contrary to the assertions of capital gains tax cut proponents, capital gains tax cuts have never led to improved economic performance. Tax laws that have increased the capital gains tax, however, typically have been followed by increased growth...The record of capital gains tax cuts when it comes to jobs is equally dismal. In fact, the unemployment rate rose sharply after both the 1978 and 1981 capital gains tax cuts. Conversely, the jobless rate fell notably after the 1976 and 1986 capital gains tax hikes were enacted.
The truth is that paying people and corporations to make investments that otherwise make no business sense undermines economic growth. Capital gains tax breaks and other supply-side loopholes of the first half of the 1980s inspired construction of tens of thousands of unneeded office buildings and led to myriad other dramatic and wasteful misallocations of American capital and effort.