This is a story that is not garnering nearly enough attention. Now I know it is competing with important stories like Tiger Woods' apology and Ron Paul's big straw poll win, but still . . . .
The recent release by the IRS of 2007 data detailing the earnings and federal taxes paid by the top 400 households in the country was revelatory in the extreme. These families averaged an astonishing $345 million in income for the year. Perhaps even more amazingly, they paid an average federal tax rate of just 16.6% of their income. In other words, they paid taxes at a rate comparable to what an individual earning $32,000 would have paid during that year.
Now I was silly enough to feel fortunate about my 2007 -- after a combined four decades of work in our respective fields, a J.D., two Masters Degrees, a lot of hours and accumulated expertise, and a couple of lucky breaks in my law practice, my wife and I managed to earn roughly one-tenth of one percent of what the Fat 400 Families made. Being chump wage earners, however, we paid 30% of our income in federal taxes.
I am not so churlish as to complain about the taxes I pay. They seem appropriate to me given our incredibly privileged position. However, I do find it disturbing to think of myself as occupying the very top tier of federal tax payers on a percentage basis. In what kind of universe does someone with my family income pay roughly twice the percentage of taxes paid by the likes of Warren Buffet or Bill Gates?
As Sam Pizzigati points out in the linked article, the 16.6% federal tax rate in 2007 was almost half of the 29.9% of income in federal taxes that the top 400 paid in 1995, and a far cry from the 51.2% in income paid as federal taxes by the top 427 families in 1955. In other words, the federal taxes assessed against the ultra rich have been cut by almost 70% since the middle of the Eisenhower era. (The 1955 tax rate would have brought in an additional $47.7 billion in tax revenue in 2007, a not inconsiderable sum.)
The notion that we as a society cannot levy greater taxes on the super rich is absurd. These people earned in one week a sum sufficient to set up comfortably any person for the rest of his or her life. It seems to me that we could tax them at a rate such that they would have to work two weeks before achieving lifetime security.
