Apocalypto: 10 Signs the U.S. Tax System Needs Fixing
Thanks to Mother Jones for this motherlode of charts and data exposing the rot eating away at the American tax system. One that particularly struck home with me, as a Brooklynite:
[A] New York janitor making slightly more than $33,000 a year pays an effective tax rate of nearly 25 percent. And the effective tax rate for a resident of the Park Avenue building named after [the late real-estate magnate Leona] Helmsley, earning an average of $1.2 million annually? A cool 14.7 percent.Ten other signs we've run off the rails:
- Between 1992 and 2007, the average tax rate for the 400 wealthiest U.S. households has fallen 37 percent while their average income has risen 392 percent
- Between 1945 and 2011, tax rates for people making at least $500,000 a year have fallen much faster than for those lower down the income ladder
- Extending the tax cuts passed under George W. Bush saves the richest 0.1 percent an average of $146,000 per year in taxes
- The effective tax rate for people earning more than $370,000 per year is roughly the same as for those making $43,000
- The effective tax rate for the top 1 percent, who have annual income of $1.2 million, is 19.8 percent, or lower than the rate for those making $67,000
- Recent tax cuts on the estates of millionaires cost the federal government $11.5 billion a year
- Mortgage-interest deductions on vacation homes are projected to cost the government $8.9 billion over 10 years
- People who make $1.2 million a year pay a total of 30 percent of their income in federal, state and local taxes, the same share as those earning $100,000
- Payroll taxes since 1950 have nearly quadrupled as a source of federal revenue and now make up nearly as much personal income tax
- Hedge fund manager John Paulson, who made $9 billion in fees during the housing bust, will pay nothing in taxes on those earnings
An indictment of the rich? Class warfare? Just the kind of socialist agitprop you'd expect from someone who wasn't even born in this country (me, not President Obama)? Not at all. There's nothing wrong with wealth. And as Columbia University economist Jeffrey Sachs says, no one in their right mind thinks the affluent should bear the tax burden alone or that the U.S. doesn't need to find sensible ways to rein in government spending.But a tax code that favors hedge fund barons over ordinary working stiffs (like, uh, bloggers) is a problem. It's as unsustainable as the mounting U.S. debt. And any "solution" that doesn't confront that issue only makes the problem worse.
Charts courtesy of Martin Sullivan of Tax.com and the Tax Policy Center
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