The other day my boss and I got into a heated debate about politics. I later felt bad because I stressed him out pretty good, which was in addition to the heavy stress from his position. Our company recently decided to let 300 people go, including a person he had just hired that had quit their old job for the position. While my boss and I do not see eye to eye on the situation in America, I respect him for being a good person. Hell, he puts up with me and he spent a lot of time that week scrambling to find his people other places in the organization (he managed to place three out of five). So I felt bad.
The points of contention were my assertion that the middle class bearing the brunt of paying taxes, no one solely builds their own business, and banks are the cause of the economic woes in this country. His views were that the rich pay 100% of the taxes (meaning the 1%), that he built his own business, and that the mortgage mess of 2008 was the result of banks being forced to make bad loans by the government. After his assertion that the 1% pay 100% of the taxes, he stated that he had seen data showing it, which I doubted. However, I did concede that I had not seen specific data on the taxation by tax bracket and would look it up. The charts and graphs that follow were found at Tax Foundation.org.
|Income Bracket||% of Total Income Tax Revenue 2011||% of Total Income Tax Revenue 2010||% of Total Income Tax Revenue 2007||% of Total Income Tax Revenue 1984|
|1 to 5%||21.40%||21.70%||20.09%||16.86%|
|5 to 10%||11.80%||11.60%||10.51%||12.58%|
|10 to 25%||17.40%||16.50%||15.30%||22.92%|
|25 to 50%||11.50%||10.50%||10.93%||19.16%|
To begin with, you may be wondering about the years I have chosen to represent here. I could have made a continuous chart from 1984 on, but the work would have been challenging given the way the data was presented on the site. Also, the earlier years I used have political and economic significance, while the jump in years emphasizes the changes that took place. In 1984 I graduated from high school and Ronald Reagan (the Republican Demigod) was president. 2007 was the last year in which I received a raise of any kind at my current company. The significance of that year did not dawn on me until I started looking up this tax data. In 2007 we still had no inkling of the hole the Banks and Wall Street were going to blow in our economy. In 2008, we knew and my company huddled in upon itself denying even cost of living raises to their employees. Interestingly enough; however, they were quite able to buy up company after company and rollout new computers to us employees. Finally, I included 2010 and 2011 because they were the most recent years available.
Let us begin analyzing the data. The first noticeable piece of information is that the bulk of the Income Tax Revenue received by the U.S. Government is paid by the top 50% of the population, which is what I believe my boss actually meant. The second thing to notice is that, while the top 1% contributes a large portion of the revenues, they do not cover more than the middle class. Of course, such a statement depends greatly on how you define the middle class. In my search, I could not find a definitive definition of the middle class that was consistently used year to year so I decided on my own. For convenience sake I defined the middle class as the tax group between the two extremes. From now on, the middle class is the range of tax payers between the top 1% and the bottom 50%.
Given this assumption, let us look at the data. In 2011, the top 1% contributed 35.1% of the tax revenues, while the middle class contributed 62.1% of the revenue. In 1984, the top 1% carried 12.2% of the load while the middle class bore 71.52%. Actually, all the years given show similar results. In addition, while the top 1% had a major increase in their tax burden coming into 2007, you can note in the graph below that their contribution is falling off while many in the middle class are seeing their taxes increase. Even the bottom 50%, who have seen their taxes go down through the same period, are starting to see tax increases.
I was also able to find data for each of these years pertaining to the income brackets for each of the class levels denoted in the first chart (see below).
|Income Bracket||Income Cut Off 2011||Income Cut Off 2010||Income Cut Off 2007||Income Cut Off 1984|
|1%||$ 388,905.00||$ 369,697.00||$ 426,603.00||$ 100,889.00|
|1 to 5%||$ 167,728.00||$ 161,579.00||$ 164,883.00||$ 55,423.00|
|5 to 10%||$ 120,136.00||$ 116,579.00||$ 116,396.00||$ 43,956.00|
|10 to 25%||$ 70,492.00||$ 69,126.00||$ 69,559.00||$ 29,390.00|
|25 to 50%||$ 34,823.00||$ 34,338.00||$ 35,541.00||$ 15,998.00|
|Bottom 50%||$ 34,823.00||$ 34,338.00||$ 35,541.00||$ 15,998.00|
This information is better seen graphically:
One of the first noticeable trends is that from 1984 to 2007, all class levels saw large increases in their income. For example, the maximum income for the bottom 50% increased 122% over the 1984 top income. However, the bottom income for the top 1% increased 323% in the same period, of course we later found out this was at the expense of the country and does not reflect the gains of the top end of that group. Now if we look at the overall gains from 1984 to 2011, we see that the top of the bottom 50% increased 118%, while the bottom of the top 1% increased 285%. The latter number actually approaches numbers I have seen on the subject. In other words, the top 1% is doing substantially better than the bottom 50% of the country even after the financial mess they created. Further, if you look at the graph, you can see that the bottom 75% has seen very little movement in their incomes. However, the top 1% is making a strong comeback already.
Another fascinating piece of information to me is the difference between the bottom income of the top 1% and the top income of the bottom 50% or the gap between the rich and the poor. In 1984 the gap was 84,891 or the bottom wage earner of the top 1% made 6.31 times the top wage earner of the bottom 50%. By 2007 the numbers were 391,062 and 12 times and for 2011 they were 354,082 and 11.17 times, only a slight improvement for the working poor. If that does not show where the real wealth redistribution is, I do not know what else to show you.
To sum up this first part of my posts responding to my boss’s views, I feel that, using the kind of data he mentioned seeing, I have shown the validity of my point of view. While the top 1% does pay a heavy part of the income revenues received by the Government, they do not pay the largest amount. The middle class does. In addition, they have benefitted far more than the bottom 50% of the U.S. population from the rules governing our economic system. To me, this is not surprising. Through their lobbyists they have actively participated in, if not written, the laws controlling our economy without any concern for the long term viability of our country. Finally, it is important to remember that the income used for the top 1% is at the bottom end of their scale, which may be topped by incomes in the hundreds of millions. One of the important facts I have learned, though I do not recall where, is that the top 1% hold 50% of the country’s wealth leaving the other 99% to scramble for the remaining 50%.