Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

America's high-income taxpayers lead the way

March 22, 2011

The Tax Policy Blog reports that America's top 10% of taxpayers pay more taxes, relative to their share of national income, than in any other OECD country:

The ratio for U.S. households is 1.35, far greater than the ratio of taxes to income in any other country. Even in the three countries with a comparable distribution of income, the ratio of taxes to income was less, 1.18 in Italy, 0.84 in Poland, and 1.20 in the U.K.
Interestingly, countries with top personal income tax rates that are higher than in the U.S., such as Germany, France, or Sweden, have ratios that are closer to 1 to 1. Meaning, the share of the tax burden paid by the richest decile in those countries is roughly equal to their share of the nation's income. By contrast, we prefer to have the wealthiest households in this country pay a share of the tax burden that is one-third greater than their share of the nation's income.

That won't appease those who feel that any money left in the hands of high-income taxpayers is too much. It will probably seem irrelevant to David Cay Johnston, who likes to point out that at the very top of the income scale -- the top 1/10th of one percent -- the effective tax rate is much lower.

I like to point out that the low rate at the top of the income scale is an artifact of the lower capital gain rate, that it doesn't count the double taxation of corporate income, and the fact that people usually get to the very top of the income scale once, when they sell their business or some other big asset in capital gain transactions. But Mr. Johnston says "The reality is you have no facts to back up your positions, do not know the history of these matters and write from what you imagine to be facts," so my facts don't count.

The TaxProf has more.

Tags: David Cay Johnston.tax policy.Tax Policy Blog.