Who Got the Biggest Tax Break in the Last 30 Years? (The Rich, Of Course) – Derek Thompson – The Atlantic
Since 1980, total tax rates have fallen for each income group — rich, poor, and everybody in the middle. But who got the biggest break?
This fabulous series of charts from the New York Times offers one answer — and it exactly the group you’re expecting. Total tax rates — that’s federal income + payroll + corporate + state/local — have gone down for poor and rich alike since 1980.
So, we all get a break. But who got the biggest?
Divide the first by the 2010 rate by the 1980 rate, and you get an answer. Taxes fell 5% for the poorest households. They fell about 7% for the typical household. And they fell 14% for the richest households. It is fair to say that between President Carter and President Obama, taxes have fallen by twice as much for the richest families as for the median family.
When it comes to taxes, “fair” is a four-letter word, and one that splits liberals and conservatives. I’d encourage anybody on either side of the debate to go back and study these New York Times graphsto see three points: (1) the richest households pay a growing share of our taxes, because (2) they earn a growing share of national income and (3) the tax code is largely progressive, except for the tippy-top.
*This is true for the mass, mass majority of tax payers. But at the very tippy-top of the income pyramid, it becomes less true. The richest households earn most of their money from capital gains, which are taxed at a lower rate than earned income. In 2009, for example, the average salary of the 400 richest U.S. households was $22 million. Their average capital gains income? $92 million. So that’s why the tax code bends back toward regressivity at the very top: We’ve decided to give investment income a tax break, and the rich happen to earn most of their money from investments.