Monday, February 23, 2009

To Balance the Budget

The tax cuts for the wealthiest 2% of Americans has helped drive up the deficit these past eight years. President Obama plans to let those tax cuts expire and that should be a great help in his plan to get the budget balanced again. Those investment tax cuts will have cost the government $197 billion in revenue.

The Internal Revenue Service has released data on tax year 2003 that show the top 1 percent of taxpayers, ranked by adjusted gross income, paid 34.3 percent of all federal income taxes that year.

In 1980, when the top statutory income tax rate went up to 70 percent, the share of income taxes paid by the top 1 percent of taxpayers was just 19.3 percent. After Ronald Reagan's tax cut of 1981, which reduced the top rate to 50 percent--a massive giveaway to the wealthy, according to critics--the percentage of income taxes paid by the top 1 percent rose steadily.

By 1986 the top 1 percent of taxpayers' share of all federal income taxes had risen to 25.7 percent. That year the top statutory tax rate was further cut to 28 percent--another huge giveaway.

The nation's top 400 taxpayers made more than $263 million on average in 2006, as the stock market was rallying, but paid income taxes at the lowest rate in the 15 years that the Internal Revenue Service has tracked such data.

Each year, the IRS releases information on the so-called Fortunate 400, the 400 U.S. taxpayers with the highest adjusted gross income.

The average income of this group was the highest recorded by the IRS and was up from $213.9 million the year before. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled from 1992, the first year such data were collected. The group's share of the adjusted gross income of all taxpayers in the country nearly doubled between 2002 and 2006, the data show -- from 0.69% to 1.31%.

Meanwhile, the group's average income tax rate -- calculated as income taxes paid as a percentage of adjusted gross income -- fell to 17.2%. in 2006 from 18.2% the prior year. That's down from 29.9% in 1995.

Making the tax cuts permanent would reduce federal revenues by almost $1.8 trillion over 10 years - and that's in addition to the $1.7 trillion of revenue losses already locked into law. By 2014, the annual revenue loss would amount to $400 billion, or 2 percent of gross domestic product - almost the size of this year's federal budget deficit."

The rich continue to get richer and richer while the poor get poorer and the middle class shrinks.

The very rich have so much money they never even miss what allowing Bush's tax cut on these wealthiest folks to expire will cost.

One thing we learned from this Bush initiative was that cutting taxes on the wealthiest 2% of Americans did not cause them to expand and create more jobs. They just moved them overseas. And they hoarded and hid the increase in their income.


Judy said...

Great post Margie. Like you said the rich get richer.

Margie's Musings said...

Yes, and the poor get poorer.

Beth said...

Thank you for this excellent post, Margie. Those statistics are very telling, aren't they? And your last paragraph is so very, very true.

Margie's Musings said...

The rich in this country have put the rest of us in a terrible shape. All because of their greed.