Interesting Statistics on Tax Rates

[otterinbham 0]

Amid all the tired "Rich Get Richer, Poor Get Poorer" clichés that we're hearing nowadays, it's useful to remember that lowered tax rates have actually boosted collections among the highest earners. Here are some Treasury Department numbers comparing percentage of federal income taxes paid by income share. Remember that the highest marginal tax rate was 70% in 1980 and 35% in 2004:

1980 2004

Top 1% -- 19% 36%

Top 5% -- 37% 56%

Top 10% -- 49% 68%

Top 25% -- 73% 48%

In short, lower tax rates have actually resulted in higher tax collections. The same is true for capital gains taxes. In 2002, capital gains tax rates were lowered from 28% to 15%. Yet, three years later, capital gains tax collections DOUBLED, even at a rate that was reduced 60%.

What's more, tax cuts have yielded increased revenues beyond the best estimates of economists. Below is a breakdown of U.S. Treasury tax collection estimates versus actual collections for the year 2004:

Estimate Actual

Top 1% -- 30.5% 35.7%

Top 5% -- 50.2% 56.2%

Top 10% -- 62.6% 67.6%

Top 25% -- 81.8% 84.4%

So the next time you hear somebody say that the tax cuts did nothing but fatten the wallets of the rich, point out these simple statistics proving that tax cuts led to a far better revenue stream for the federal government. Counter-intuitive to the unimaginative world of Keynsian economics, tax payments by the wealthy have continually risen almost in inverse proportion to the tax rates. Likewise, the real bite on the middle class comes from payroll and state taxes.

[Tigermike 3,055]

Thanks Otter for the info.

P.T. Barnum said

“Every crowd has a silver lining.” The dims say "Every silver lining has a dark cloud."

“More persons, on the whole, are humbugged by believing in nothing, than by believing too much” The dims say "The rich get rich with the Bush tax cuts, we will look out for the little men and women."

It's sad but all positive economic facts can and will be distorted, discounted and completely ignored by the masses buying into the rhetoric and agenda of the dimocrats.

It is not enough to have the right and correct facts. When the democrats are telling people that they (the dims) care more. How many times have you heard someone say, "At least I know the democrats care about me (us) unlike the rich republicans."

[Bottomfeeder 244]

How about eliminating the income tax altogether?

http://www.youtube.com/watch?v=IWfIhFhelm8

[TexasTiger 13,031]

Republicans claimed the sky would fall with Clinton's 1993 budget that included the "biggest tax increase in history." It was followed by the longest period of sustained growth in history and budget surpluses. Taxes increased, and the economy turned around. Otter, I dare say you didn't accurately predict what would follow those tax increases. I don't know anyone with your mantra on taxes that did. No offense intended, but I've never heard a viable explanation of that economic growth from a Republican. I hear it credited to Reagan, luck, blah, blah, blah.

[otterinbham 0]

Republicans claimed the sky would fall with Clinton's 1993 budget that included the "biggest tax increase in history." It was followed by the longest period of sustained growth in history and budget surpluses. Taxes increased, and the economy turned around. Otter, I dare say you didn't accurately predict what would follow those tax increases. I don't know anyone with your mantra on taxes that did. No offense intended, but I've never heard a viable explanation of that economic growth from a Republican. I hear it credited to Reagan, luck, blah, blah, blah.

Whoa.

First of all, outside of two very brief and mild recessions that began in 1991 and 2000, the United States has enjoyed vigorous economic growth since 1982 when tax cuts and fiscal policy finally began to make their collective effects known. The Clinton Years only represented eight years of what have been a 25 year long sustained growth period, due mainly to a visible break with Keynsian economics. If you really want to thank somebody, thank Milton Friedman, Paul Volker, and Alan Greenspan for implementing a sane fiscal policy, and Ronald Reagan for lowering tax rates and gutting regulations.

That being said, the tax hikes during the Clinton presidency were not that severe, and certainly did not hike levels back up to the punitive levels of the 1970s. Further, the budget surpluses did not begin to manifest themselves until the last two years of the Clinton presidency. I would also like to point out that explosive economic growth did not take place until after the 1994 mid-term elections, when the Republicans wrenched control away from a congress that was seriously considering nationalizing healthcare.

Further, while I'll give Clinton for not halting the move towards free trade, the biggest reason for the budget surpluses at the end of his administration was the wholesale overhaul of welfare, which provided an almost immediate boost to the government's fiscal solvency--a largely Republican achievement. A shame that current Republicans don't have the same degree of fiscal responsibility.

Truth be told, with far lower tax rates, especially in capital gains, the US only has a projected budget deficit of $175 billion this year, less than 1% of the GDP. And, if it weren't for the Prescription Act, the US would now be operating at a surplus.

[Tigermike 3,055]

A shame that current Republicans don't have the same degree of fiscal responsibility.

Well said Otter.

I will highlight only one point.