Almost Classical

The marginal and effective U.S. income tax rates mentioned in my 2011 post The 90 Percent Tax Myth  have been supported by research conducted by Thomas Piketty (Paris School of Economics), Emmanuel Saez (UC Berkeley and NBER), and Gabriel Zucman (UC Berkeley and NBER). These economic researchers are well-respected by progressives. Data are data, though we differ on interpretations. "Income" vs. "Wealth" presents much of the challenge, as wealth accumulates but is not taxed in the United States. Distributional National Accounts:  Methods and Estimates for the United States published July 6, 2017, includes the following table: As the table shows, the effective tax rate for the top 1 percent peaked at 45 percent of income in 1944-45. Unfortunately, the overall revenue intake of the United States kept growing and the burden has been falling most on the bottom 50 percent. Tax increases on the middle and lower classes reduce potential economic growth s...

English: A graph of the US GDP compared with Federal budget outlay. (Photo credit: Wikipedia ) The United States' federal budget spends a lot of money: between $3.5 and $4.0 trillion annually. How much do citizens of the United States earn each year? A little more than $6 trillion. In other words, the U.S. government is spending roughly two-thirds of the amount earned by all working  Americans. Two-thirds. The top 10% of income earners represent $1 trillion in earnings, certainly a lot, equal to the entire stock valuation of Apple (not the same as Apple's earnings, which are $9 billion per quarter, $36 billion annually). If every penny earned by the top 10% were confiscated  it would have no material effect on the federal budget. That's how out of sync spending is today. The total wealth  in the United States is nearly $70 trillion, meaning everything owned by every person or company, at current "fair value" is worth $70 trillion. Yet, if you were ...

This campaign season in the United States is already producing some meme myths on social media. One I keep seeing is the "90% tax rate" myth. Often, the responses prove people don't understand the marginal rate system of the U.S. income tax. Another meme that does reflect marginal rates claims there was a 70 percent effective tax rate. That's not quite reality, either, though. (It is, and it isn't, as I'll try to explain.) The most popular blog posts on Almost Classical remains The 90% Tax Rate Myth , in which I explain effective rates vs. top marginal rates and the relative stability of top rates excluding outliers of less than 10 tax filers. That’s necessary because some of the “top tax rates” would have applied to… ONE PERSON . As I wrote in that old post: As a result of deductions and exclusions, even the theoretical maximum Real Rate of taxation at 60% in 1944 overstates taxation dramatically. The reality? On earned income, the richest U.S. taxpayer...

[NOTE Augusut 8, 2017:  The marginal and effective U.S. Tax rates mentioned in this 2011 post have been supported by research conducted by Thomas Piketty (Paris School of Economics), Emmanuel Saez (UC Berkeley and NBER), and Gabriel Zucman (UC Berkeley and NBER). These economic researchers are well-respected by progressives. Data are data, though we differ on interpretations. "Income" vs. "Wealth" presents much of the challenge, as wealth accumulates but is not taxed in the United States. Distributional National Accounts:  Methods and Estimates for the United States published July 6, 2017, includes the following table: As the table shows, the effective tax rate for the top 1 percent peaked at 45 percent of income in 1944-45. Unfortunately, the overall revenue intake of the United States kept growing and the burden has been falling most on the bottom 50 percent. Tax increases on the middle and lower classes reduce potential economic growth since...