“The Macarena” was ranked “The #1 Greatest One-Hit Wonder of All
Time” by VH1. The Spanish dance song by Los del Rio became a big
international hit in 1995 and 1996. And then it was old.
After 100 listens, Los del Rio needed something new. It
didn’t come and they were gone.
I wonder if the same thing is going to happen after
hearing President Obama say 100 times that “the rich” aren’t paying
enough taxes and that everyone else is being economically
exploited.
The line appeared to sound good to a lot of people the
first few times. But will it still play after it’s the persistent
focus of Obama’s stump speeches for nearly another year?
In any case, if we’re going to be talking about who’s
earning what and who isn’t paying enough until November’s
presidential election, it seems like a good idea to see how income
and the tax burden are actually distributed.
The latest official numbers we have are from Internal
Revenue Service reports for calendar year 2009.
The IRS reports show that the top 1 percent of income
earners, those making $343,947 and over, earned 16.9 percent of the
nation’s adjusted gross income and paid 36.7 percent of all federal
individual income taxes.
Mr. Obama doesn’t mention it in his speeches, but the
Internal Revenue Service’s 2009 tax data show that the top 5
percent of the nation’s income earners paid a far larger share of
total federal individual income taxes than the bottom 95 percent of
earners.
The top 5 percent, making $154,643 and over, earned 31.7
percent of the nation’s total adjusted gross income and paid 58.7
percent of all federal individual income taxes while the bottom 95
percent of income earners received 68.3 percent of total income and
paid 41.3 percent of all federal individual income
taxes.
The bottom 50 percent of income recipients earned 13.5
percent of the nation’s total adjusted gross income in 2009 and
paid 2.3 percent of total federal income taxes
collected.
President Obama also doesn’t mention what the allegedly
“unfair” super-top earners pay. The same IRS data show the top 0.1
percent of income earners (the top 10 percent of the top 1 percent
of earners) earned 7.8 percent of the nation’s total adjusted gross
income and paid 17.1 percent of the nation’s total federal
individual income taxes.
“The average income for a tax return in the top 0.1
percent was $4.4 million in 2009, while the average amount of
income taxes paid was $1.07 million, indicating an average
effective individual income tax rate of 24.3 percent,” reports the
Tax Foundation. Furthermore, “this very top income group has a
lower average effective income tax rate than the rest of the top 1
percent of returns because these extremely high-income returns are
more likely to have income from capital gains and dividends” —
income that “has already been taxed once by the corporate income
tax.” In other words, the aforementioned 24.3 percent tax rate
considerably understates the actual income tax rate paid by the top
0.1 percent of income earners.
In a sidewalk discussion on income and taxes with “Joe the
Plumber” during the 2008 presidential campaign, candidate Obama
said, “I think when you spread the wealth around, it’s good for
everybody.”
Clearly, we already do spread it around — lots of it. A
debate on where to draw the line should be a rational discussion,
considering incentives, efficiency, American competitiveness and
impacts on economic growth, so that what results is “good for
everybody.”
