5 ms·

Good narrative but the data doesn't support the claim: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S

gruez 3y ago
I looked at their source, which turns out to this google sheets page: https://docs.google.com/spreadsheets/d/1q2zxQihvTduZy-u0IADmj93qI5AwDttujM1WJCGKOaE/edit#gid=0 https://docs.google.com/spreadsheets/d/1q2zxQihvTduZy-u0IADm... which in turn seems to be based on IRS aggregate taxpayer data. Based on a quick of the IRS data referenced, the "effective rates" does seem to be actual effective rates (ie. calculated based on how much the IRS is getting, rather than calculating based on what the brackets are). That said, I can think of multiple reasons why they don't correspond to the graph above: 1. At least in the early data, millionaires don't make up that much of overall tax take. For instance in 1945 they only made up of 0.1% of overall tax receipts. That means the effective rate of 64% makes a negligible contribution to the effective tax rate of the entire economy as a whole. 2. The threshold for millionaires is also not adjusted for inflation, so you'd expect the effective tax rate to drop as the brackets are moved up to account for inflation.
- quanto 3y ago
  Indeed. This whole article hinges upon a poor understanding of data, or worse, an intentional deception using data. A million dollars now is very different from a million dollars 70 years back. Even after adjusting for broad inflation, there are far more citizens have assets worth a million dollars due to home ownership and asset price increase.
mint2 3y ago
That’s a graph showing federal tax receipts being roughly constant? Good find but that supports the article, not contradicts it. receipts constant while millionaires taxes rates decreasing = the middle class pickup of the tab.
- refurb 3y ago
  But the percentage of income taxes born by the top income earners has only increased over time. It’s decreased for all the lower income levels. https://files.taxfoundation.org/legacy/docs/TaxShareTop1Bottom90_0.png https://files.taxfoundation.org/legacy/docs/TaxShareTop1Bott...
  - gruez 3y ago
    "percentage of income taxes born" =/= "Effective Tax Rate" For instance, if the top 1%/millionaires earned more income (as a proportion), you'd expect the "percentage of income taxes born" figure to go up, even if the effective tax rates remained constant or dipped slightly.
    - refurb 3y ago
      True, but regardless the top 1% is paying a greater and greater share of total tax burden.
s1artibartfast 3y ago
That itself is an ahistorical take. Tax as a percent of the economy has gone through the roof, both as a percent of GDP, and as inflation adjusted dollars. If you compare to a benchmark like the 1940s, tax% of GDP has more than doubled, and GDP has increased ~4x. This means someone today taxes are about 10X the taxes (controlling for for inflation!) Consider that 40% of US GDP now is collected in some form of taxation (city, state, and federal).[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP).

gruez 3y ago

I looked at their source, which turns out to this google sheets page: https://docs.google.com/spreadsheets/d/1q2zxQihvTduZy-u0IADmj93qI5AwDttujM1WJCGKOaE/edit#gid=0 https://docs.google.com/spreadsheets/d/1q2zxQihvTduZy-u0IADm... which in turn seems to be based on IRS aggregate taxpayer data. Based on a quick of the IRS data referenced, the "effective rates" does seem to be actual effective rates (ie. calculated based on how much the IRS is getting, rather than calculating based on what the brackets are). That said, I can think of multiple reasons why they don't correspond to the graph above: 1. At least in the early data, millionaires don't make up that much of overall tax take. For instance in 1945 they only made up of 0.1% of overall tax receipts. That means the effective rate of 64% makes a negligible contribution to the effective tax rate of the entire economy as a whole. 2. The threshold for millionaires is also not adjusted for inflation, so you'd expect the effective tax rate to drop as the brackets are moved up to account for inflation.

quanto 3y ago
Indeed. This whole article hinges upon a poor understanding of data, or worse, an intentional deception using data. A million dollars now is very different from a million dollars 70 years back. Even after adjusting for broad inflation, there are far more citizens have assets worth a million dollars due to home ownership and asset price increase.

mint2 3y ago

That’s a graph showing federal tax receipts being roughly constant? Good find but that supports the article, not contradicts it. receipts constant while millionaires taxes rates decreasing = the middle class pickup of the tab.

refurb 3y ago
But the percentage of income taxes born by the top income earners has only increased over time. It’s decreased for all the lower income levels. https://files.taxfoundation.org/legacy/docs/TaxShareTop1Bottom90_0.png https://files.taxfoundation.org/legacy/docs/TaxShareTop1Bott...
- gruez 3y ago
  "percentage of income taxes born" =/= "Effective Tax Rate" For instance, if the top 1%/millionaires earned more income (as a proportion), you'd expect the "percentage of income taxes born" figure to go up, even if the effective tax rates remained constant or dipped slightly.
  - refurb 3y ago
    True, but regardless the top 1% is paying a greater and greater share of total tax burden.

s1artibartfast 3y ago

That itself is an ahistorical take. Tax as a percent of the economy has gone through the roof, both as a percent of GDP, and as inflation adjusted dollars. If you compare to a benchmark like the 1940s, tax% of GDP has more than doubled, and GDP has increased ~4x. This means someone today taxes are about 10X the taxes (controlling for for inflation!) Consider that 40% of US GDP now is collected in some form of taxation (city, state, and federal).[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP).