Oh, do the rich pay more. Or as he says, here's "the progressivity of the tax system."
The CBO has released a new report on effective tax rates (total taxes divided by total income). Compared with previous reports, it includes more information about thin slices at the top of the income distribution. Here are the total effective federal tax rates for 2005, the most recent year available:
Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent
In other econ news, the Mercatus center--or what the WSJ called a "Thundering fortress of deregulatory theory"--at George Mason University has started the 'Financial Markets Working Group,' to clarify some of the current misunderstanding about how market economics works, and to contribute to the current crisis by providing their experts' research.
Ongoing financial market turmoil is leading policy makers and the public to contemplate increasingly complex regulation - in other words, crisis will lead to action. But without a sound understanding of both the causes of recent instability and the effects of proposed policies, action is likely to lead to unintended consequences and undesired outcomes. The Mercatus Center's Financial Markets Working Group will lead the effort to inform forthcoming policy debates with rigorous economic analysis through credible academic research.
Read and be enlightened.
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