Monday, May 01, 2006

The rich are getting richer?

Alberta Conservative left this great link in the comments. It pokes some holes in those tax-hiking arguments from the usual suspects.

It turns out that the income tax burden has substantially shifted onto the wealthy. The percentage of federal income taxes paid by those who make more than $200,000 a year has actually risen from 41% to 47% in recent years.

In other words, the richest 3 out of 100 Americans are now paying close to the same amount in income taxes as the other 97% of workers combined.

It's also a common myth that the rich are hording all the wealth, while the middle class stays stuck in economic quicksand. The IRS data show that the share of all income earned by the wealthiest 10% of Americans has actually fallen since 2001. The rich are earning less of the total income but paying more of the total taxes.

During this economic expansion, the middle class is growing and becoming more prosperous. About 4 out of 10 Americans now make more than $50,000 a year -- that's up from 3 out of 10 in 1990.

There's more good news. Tax revenues over the past two years are up more than half a trillion dollars — the largest two-year increase in tax collections in history. Bush cut the capital gains and dividend taxes, but guess what? Now those tax receipts are through the roof in the last two years.

35 comments:

R.S. Porter said...

Is the CTF against a Flat Tax?

David MacLean said...

Not at all. In fact, I was going to do a bit of a book review of Steve Forbes' book on flat taxes but I never got around to it.

Chad Moats said...

At what marginal tax rate would you suggest the Laffer Curve reaches its apex ?

David MacLean said...

It's hard to say. We're definitely on the wrong side of the curve in Canada. If the US was on the wrong side before their tax reforms, we're definitely on the wrong side here.

Scott Hennig said...

Excellent question from Chad.

Some economists have claimed that Alberta still hasn't lowered it's taxes enough to capture the entire area it could. We saw the number of tax fillers rise here in Alberta after they reduced their marginal tax rate to 10% and introduced a flat tax.

Although the curve is more complicated once you factor in the BPE. Did Forbes' book address the BPE issue vs. flat tax? I've always wondered if the Laffer curve loss of revenue is best captured through an increase in the BPE or a reduction in the marginal tax rate.

Theoretically of course...

Chad Moats said...

Really, why do most economists peg the rate at 60-80% ?
Actually US and Canada's income tax rates are similar, Canada's may actually be less.
The USA charges 10% are your 1st $7,150, Canada 0% to $8,648. Next bracket 15% each, USA to $29,050, Canada to $35,595. Next is USA 25% to $70,350, Canada 22% to $71,190. Then 28% to $146,750 in US vs. 26% to $115,739 in Canada. The next one is 33% in the US to $319,100. The Great White North 29% for everything over $115,739. The USA has another bracket for everything over $319,100 of 35%, Canada none.

Seems we might be on the left side of the laffer curve.

David MacLean said...

You said effective tax rates -- those encompass all tax rates.

Alberta Conservative said...

Chad, for one thing you're comparing dollars in US figures on the one hand and Canadian in the other. More importantly, you'd have to consider other forms of taxation, not just income taxes.

Chad Moats said...

True, I didn't add in any State income tax or municipal or county or sales taxes at each level or other levies.
Dollar to dollar, Canada's is more "competitive" in personal income taxes,period. We don't tax all income and we don't have an extra top bracket, all our brackets have higher thresholds and lower percentages . Exchange rate is not calculated due to paying taxes in each countries currency.
David, I said marginal tax rate, read the post or did you forget your new rule ?

Anonymous said...

Americans have a lot more tax credits to choose from than we do in Canada.

Chad Moats said...

and pay more taxes at each level of government. Some areas pay 3-4 sales and income taxes. As well as property tax on vehicles.
The fact is it's a myth that the USA has a more "competitive" tax structure.

Sask.Taxpayers Federation said...

The rich pay more taxes!!?? You're sniffin glue super Dave. They also have more tax shelters and write offs.

R.S. Porter said...

Just because many are able to afford good accountants doesn't mean that you get to ignore the truth. The rich pay the most taxes.

Sask.Taxpayers Federation said...

No they don't. That's a crock. Show me.

Sask.Taxpayers Federation said...

I don't know if this is the right place to bring this up but.................The Tory Government is giving each slain Canadian soldiers family 250,000.00. That is alot of money on top of death benefits of 1500.00 a month. I know these soldiers gave their lives for war but this set a pressident that could cost taxpayers millions. What are peoples feelings about this?

David MacLean said...

STF -- the wealthiest 10 per cent in canada pay 80 per cent of the taxes.

David MacLean said...

I didn't know that. I'm curious what other countries do. Perhaps soldiers have trouble getting life insurance?

Alberta Conservative said...

The new Veterans Charter gives a lum sum payment in place of a monthly disability pension (based upon existing models in the UK and Australia). It was given broad support from all parties in the House of Commons.

R.S. Porter said...

No they don't. That's a crock. Show me.

According to the Fraser institute:

"[T]the top three deciles represent the 30 percent of families with the highest incomes. In 2000, families with incomes in the top 30 percent (those earning $63,209 or more) earned 59.4 percent of total income but paid 65.7 percent of all taxes. Families in the lowest three deciles, on the other hand, earned 8.1 percent of all income but paid 4.3 percent of all taxes."

Sask.Taxpayers federation said...

The wealthiest people don't pay any tax. Where do you get these faerytale stats from? You don't really believe what you say? The top 10 percent of taxpayers hardly pay any tax. I think you have your wires crossed Super Dave. The majority of taxes are paid by 80% of the people. I have some rich relations who paid 2,500.00 tax on 250,000.00 income. You're full of crapola Dave.

Sask.Taxpayers Federation said...

If you're in the top 10% wealthiest in Canada and you're paying income tax get a new accountant.

Sask.Taxpayers federation said...

63,000.00 a year per household is considered middle class income. My wife and I earn more than that. I'm talking about the top 10% of income.

R.S. Porter said...

If you honestly think that the top 10% do not pay any taxes, you need help. Where do you get your stats from? In fact, you don't even have any stats whatsoever.

Sask.taxpayers Federation said...

I can tell you right now none of you are in the top 10%. So don't worry about it. And most don't pay any income tax. Show me your stats.

R.S. Porter said...

"The group comprising the 10% of taxfilers with the highest income—more than $64,500 in 2002—provided more than 50% of the federal personal income tax revenue in 2002. Between 1990 and 2002, the share of federal tax paid by this group went from 46.0% to 52.6%."

[http://www.statcan.ca/english/research/11-621-MIE/11-621-MIE2005024.pdf]

Anonymous said...

Soldiers join knowing that death is a posibility. ordinary men and women are killed at work every day and they didn't sign up for the posibility, where is their 250k.

Farmer Joe said...

How many ordinary people being asked to walk into booby traps, approached by suicide bombers, and getting shot at?

And a lot of them are insured for more than $250K.

Anonymous said...

You missed the point an average of two people a day are killed in Canada in the workplace. These people go to work expecting to go home to their families after work. When you voluntarily sign up to go to war you have to know that one of the things that might happen is you won't be coming home. It’s sad and everything but you signed up for that possibility the average worker didn't. You will also find that most people killed on the job are young inexperienced workers hard to imagine them having 250k of life insurance.

Farmer Joe said...

What's the difference? Every occupation has risks and every body 'voluntarily' sign's up for their job knowing what the wages, benefits and risks to that job are.

The odd's of getting injured or killed vary drastically from job to job which is why the compensation varies.

It's not that one persons life is worth more than another it's just that you have to pay people more to do more dangerous work.

And being a soldier on the front line of a conflict is a hell of a lot more dangerous than working in a factory or a construction site or pretty much any other line of work. Most people wouldn't do it for all the money in the world.

Farmer Joe said...

And their is a world of difference between an 'accident' and someone consciously trying to kill you.

Anonymous said...

And their is a world of difference between an 'accident' and someone consciously trying to kill you.

Thats my point
One the individual signed up for and the other the individual did not.

Farmer Joe said...

Both people signed up with full knowledge of what the consequences might be. If someone dosen't think they might get hurt or possibly killed on a construction site then they have deluded themselves.

Anonymous said...

you my farmer riend are a waist of type.

Farmer Joe said...

Victory is mine!

David MacLean said...

That's an understatement.

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