I think these charts, from Mother Jones, make the case for tax policies that are routinely dismissed as "soaking the rich."
I argued, here, for creating new tax brackets that make distinctions between those who are merely rich and those who are drowning in it--make Joe Mauer pay in at a higher rate than his dentist, just as my dentist has to pay in at a higher rate than I do, was my inevitably sports-flavored metaphor. Now take a look at the first chart, which zooms in on families in the top one per cent of the income distribution. On average, their income is $1,137,684. But the average income of those in the top one-hundredth of the top one per cent is about twenty-four times that. Let's say it again, in slightly different form. Families that have income that places them in the top one-ten thousandth of all families take in, on average, about twenty-four times more money than the average of those who are merely in the top one per cent.
Yet the tax laws treat everyone in the top one per cent pretty much alike. For example, where I live, in Minnesota, the top rate of the state income tax (7.85%) applies to all married couples filing jointly with a taxable income north of about $132,000. You made $135,000 of taxable income? Give 7.85% to Minnesota. You made $135,000 a hundred times over? Give 7.85% to Minnesota. Zero progressivity at the pinnacle.
Gazing at the different charts, the question arises: which is the most astounding? I vote for the side-by-side display beneath the banner "Winners Takes All." From 1979-2007 (the last year for which data is available), the share of all income that goes to the bottom four quintiles is a flat line. The line for the top quintile rises modestly--but that is only because the line for the top one per cent spikes sharply upward.
Meanwhile, in Wisconsin, tea-party patriots drive their beat up pick-up trucks to Madison to shout at schoolteachers who have agreed to cuts in benefits but still want to be able to bargain collectively. A tax hike on the super rich? It's unthinkable. Here in Minnesota, when the latest budget forecast reduced the estimated deficit from $6.2 billion to $5.0 billion, Democratic governor Mark Dayton quickly withdrew his proposal to impose a temporary 3 per cent "surcharge" on incomes above $500,000.
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