• Facebook
  • Twitter
  • Subscribe
  • RSS

Tax Burdens By Quintile

Earlier this week, I published the breakdown of tax burdens that has been making the rounds:

Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent

Andrew Sullivan provides the flip side of the coin:  After-tax income.

Lowest quintile: 15,300
Second quintile: 33,700
Middle quintile: 50,200
Fourth quintile: 70,300
Percentiles 81-90: 96,100
Percentiles 91-95: 125,500
Percentiles 96-99: 200,500
Percentiles 99.0-99.5:413,300
Percentiles 99.5-99.9: 830,100
Percentiles 99.9-99.99: 3,191,600
Top 0.01 Percentile: 24,286,300

UPDATE:  My initial analysis of this was based on a misrecollection of what the first set of numbers represent; they’re “total effective federal tax rates for 2005,” not percent of the federal tax burden.  My apologies.

I’m not really sure what the second set of data tells us, other than that income operates as something like a standard distribution and that it’s therefore incredibly skewed at the ends.  At the bottom, obviously, it’s bounded at zero whereas it’s unbounded at the top.   That rich people remain rich even after handing a third of their earnings over to the Federal Treasury isn’t any more surprising than that low income earners still don’t have a lot of money even after getting to keep essentially all of it.

Related Posts:

About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. Dantheman says:

    I think you are confusing percentage of income paid as taxes and percentage of total taxes paid. Otherwise, adding up the numbers in the first column, all of our taxes are paid more than twice over.

    Like or Dislike: Thumb up 1 Thumb down 0

  2. Maniakes says:

    I think the first set of numbers are the percentage of their income they pay in taxes, not the percentage of all taxes they pay.

    Like or Dislike: Thumb up 0 Thumb down 0

  3. James Joyner says:

    Yes, you’re both right. Post corrected.

    Like or Dislike: Thumb up 0 Thumb down 0

  4. Dave Schuler says:

    Both of the commenters above beat me to the punch.

    I wish that rather than lining up along partisan lines or hiding behind slogans we’d have a real national dialogue about what sort of society we’d like to be, how the means we’re advocating relate to the ends we’re seeking, and what the philosophical basis of it all is. Hypothetically, that’s what elections are but I doubt that national elections have been about that since Jackson’s time, if ever.

    Occasionally, there are glimmers of that. The Lincoln-Douglas debates were such a glimmer.

    I’ll start. I think that we’re a rich enough country that we should be willing to exert substantial efforts to see that none of its residents are seriously in want. I define seriously in want as starving, dying of exposure, bleeding to death for lack of care, and the like. To my mind not being able to afford everything you might want does not fit the definition.

    I don’t think that some people paying more taxes than others or paying a higher proportion of their income than others is wrong. I think people who are well-to-do receive substantial benefits from the country and, frankly, you can’t operate a modern society without some sort of progressive tax. I think that confiscatory tax rates are imprudent, counterproductive, and encourage evasion (and, consequently, diminish respect for the law).

    I think that the values that underlie my view of a decent society are partially utilitarian in that you have a more peaceful and more orderly society. However, I acknowledge that I don’t believe that an entirely utilitarian case can be made for such a decent society. Ultimately, I think you need to rely on transcendent values of one sort or another.

    Like or Dislike: Thumb up 0 Thumb down 0

  5. sam says:

    Who was it said that the rich and the poor never seem to have enough money?

    Like or Dislike: Thumb up 0 Thumb down 0

  6. James Joyner says:

    Dave, the bit of dialogue from “West Wing” that I appended as an update to the last post is about right on that score:

    Henry, last fall, every time your boss got on the stump, and said, ‘It’s time for the rich to pay their fair share,’ I hid under a couch and changed my name. I left Gage Whitney making $400,000 a year, which means I paid twenty-seven times the national average in income tax. I paid my fair share, and the fair share of twenty-six other people. And, I’m happy to, ’cause that’s the only way it’s gonna work, and it’s in my best interest that everybody be able to go to schools and drive on roads, but I don’t get twenty-seven votes on election day. The fire department doesn’t come to my house twenty-seven times faster and the water doesn’t come out of my faucet twenty-seven times hotter. The top one percent of wage earners in this country pay for twenty-two percent of this country. Let’s not call them names while they’re doing it, is all I’m saying.

    I’m making far less than $400k but the wife and I are doing well, even adjusted for DC. I fully expect to pay more, even as a percentage, than those at the very bottom of the wage scale. But, as you say, the ends to which those funds are allocated is an issue.

    Like or Dislike: Thumb up 0 Thumb down 0

  7. Bithead says:

    There’s an old Russian saying: We all want to be equal…. with the rich.

    I don’t think that some people paying more taxes than others or paying a higher proportion of their income than others is wrong. I think people who are well-to-do receive substantial benefits from the country and, frankly, you can’t operate a modern society without some sort of progressive tax. I think that confiscatory tax rates are imprudent, counterproductive, and encourage evasion (and, consequently, diminish respect for the law).

    First, to Dave’s point, I DO think government trying to make all outcomes equal to be a wrong, both in a moral and fiscal sense. The easiest demonstration of this is the current fiscal problem brought on by the singularly bad fiskcal and immoral to reduce the cost of housing for the benefit of ‘the poor’. And the upcoming healthcare debacle, for that matter. In both cases, we’re dealing with government trying to wave a magic wand over something and change reality.

    What you’re needful of, in those events, is charity. Government isn’t charity. Taxes are not charity. Taxes are confiscation.

    Let me illustrate that point just a bit. I wrote last Christmas:

    Pay attention also, to the concept of Christmastime as a charitable time. I remarked a day or two back in a Ramble, about Nick Kristoff’s peice in the New York Times, about the lack of charity among the left. I pointed to an post I’d put up in the comments section at Q&O, where I remarked about statements Barack Obama had made:

    Look; what he says here, on the surface, is quite correct. We are in fact under a scripturally ordained responsibility to reach out and help others. No question.

    Where he falls short of the mark, is where he conflates individual acts of charity, with government involvement. Note again where I say we are under a scripturally ordained responsibility… we as individuals….not the government. Not even as one church or another. As individuals. I eman, at what point did Christ say ’governments are the source of charity”? No. Rather, Christ himself said:

    ” Give unto Ceasar that which is Ceasar’s and give unto God, that which is God’s.”

    If you break this line of Christ’s down, you see there’s a rather thick line, drawn between charity and government. Confiscation which is what taxes are, is not charity, and it is certainly not the act of an individual. Charity is the realm of God, and the individual….not of government….

    That passage came to mind yet again, as I re-read the post, re-posted below, as I could hear Scrooge saying, “Are there no prisons? Are there no workhouses?” Scrooge, you see, thought of charity, as the work of government, too. A clever man, Dickens.A man with a keen insight into human nature.

    That point aside, by what right do you remove my money, goods, and services, to give to someone who isn’t as successful, or doesn’t share my work ethic, or my talent? There’s a word for that kind of thing; it’s called “theft”.

    It also in the end is counter productive to society.

    Like or Dislike: Thumb up 0 Thumb down 0

  8. Steve Verdon says:

    I’ll start. I think that we’re a rich enough country that we should be willing to exert substantial efforts to see that none of its residents are seriously in want.

    I guess this begs for a definition of what is serious want, and can we reduce it to some level of income?

    For example, is is say…$5,000/person? If so, maybe we should consider revamping our “social safety net” to ensure that every person gets $5,000/year and nothing more (at all, ever). Thus a family of 4 would get $20,000/year.

    I imagine this might be alot cheaper and easier than trying to make sure that said family of 4 gets just the right amount of this, that and the other thing. Let said family make their own decisions on how to spend that income.

    We could even make it so that it “pays to work”. If you earn say, $1,000 then the per person stipend is reduced by an amount less than $5,000.

    Like or Dislike: Thumb up 0 Thumb down 0

  9. There are a couple of important ingredients missing from the discussion here thus far, to wit, incentives and risk. You cannot assume people will keep just acting the same way as you disincentivize them or increase their risk without the opportunity for commensurate rewards. This is where progressivism in all its flavors falls apart, because people just won’t act the way they are supposed to once you read the fine print of the utopian schemes.

    Dave, you say we are rich. Well, how did we get that way? Isn’t that particularly relevant to what we choose to do going forward? I hate to be tedious about it, but these conversations also frequently tend to conflate wealth and income when they are not even close to the same thing. A lot of wealthy people will show no income for 2008 because of market losses. This means I will be probably be paying more in taxes for 2008 than a lot of people who are much more wealthy than I. Is that fair? Why or why not?

    Did those more wealthy eat any less better than I or live any less better than I or take fewer exotic vacations than I in 2008? How about 2009? And yes, I realize this is a very strong argument for a consumption tax rather than an income tax.

    Rant over, for now.

    Like or Dislike: Thumb up 0 Thumb down 0

  10. M1EK says:

    The West Wing quote is very telling – local taxes are what pay for firemen, and those are far less progressive.

    Yes, rich people do indeed get a hell of a lot more benefit out of government than do poor people. Ask yourself how easy it is to be rich in a country without the rule of law sometime.

    Like or Dislike: Thumb up 0 Thumb down 0

  11. James Joyner says:

    Yes, rich people do indeed get a hell of a lot more benefit out of government than do poor people. Ask yourself how easy it is to be rich in a country without the rule of law sometime.

    That’s a public good consumed by all equally. Most upper middle class folks have zero interaction with police or the courts, aside from the occasional traffic ticket.

    Like or Dislike: Thumb up 0 Thumb down 0

  12. M1EK says:

    That’s not what I meant, James. Without the rule of law (from things like patent protection to the fact that you don’t need to pay bribes, usually, to the fact that rich people don’t have to have large forces of bodyguards here), rich people suffer more than poor people do.

    Like or Dislike: Thumb up 0 Thumb down 0

  13. Bithead says:

    I guess this begs for a definition of what is serious want, and can we reduce it to some level of income?

    Quite so, Steve. Thomas Sowell adresses this point rather well. In part:

    Even in the United States, most people did not have a telephone or a refrigerator as late as 1930. Today, most Americans living below the official poverty level have not only these things but also color television, air-conditioning, a microwave oven, and a motor vehicle.

    (read the whole thing)

    Like or Dislike: Thumb up 0 Thumb down 0

  14. PD Shaw says:

    I don’t think that some people paying more taxes than others or paying a higher proportion of their income than others is wrong.

    Me neither. I would go one step further. I don’t think that people at the lowest ends of the income stream should pay any income taxes. I don’t think it is moral for the government to tax income needed to make ends meet.

    The poor pay taxes, some of which are regressive, some of which they have less ability to avoid, and some of which effectively burden the working poor, like the payroll tax.

    The taxation line is subject to debate, but should rest on fiscal prudence. We cannot, for instance, exempt a majority of Americans from taxation and have a sufficient tax base for government to function.

    (I am opposed to the earned income tax credit, aka/ fast food subsidy, but I think that ship has probably sailed)

    Like or Dislike: Thumb up 0 Thumb down 0

  15. Ask yourself how easy it is to be rich in a country without the rule of law sometime.

    Ask youself instead how easy it is to be middle class in a country without the rule of law. Last time I checked, every country in history had rich people and poor people regardless of the level of law and order that existed there, but the middle class ceases to exist where there is no law and order.

    Like or Dislike: Thumb up 0 Thumb down 0

  16. M1EK says:

    charles, that’s nonsense — you get a few warlords in a place like Somalia (rich in relation to their peers), but no true ‘rich’ people by our standards – precisely because it’s impossible to become and/or stay rich there.

    The vast majority of ‘rich’ people in this country wouldn’t be able to hold on to most of their wealth if we suddenly lost the rule of law. They’d spend most of it on bodyguards and generators and additional servants and still end up losing the rest.

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Steve Verdon says:

    James has already pointed out that the rule of law is a public good. Let me define a public good:

    pure public good: any good where consumption of said good by one consumer does not reduce the ability of another consumer to consume the good as well in lesser, equal or greater protions and where consumers cannot be excluded.

    public good with congestion: any good where consumption by any consumer can or cannot be excluded, but where additional consumers use of the good reduces that ability of later consumers to consume an equal amount of the good.

    Note that health care, housing, and food are NOT public goods by definition. If I eat a sandwhich nobody else can then eat the sandwhich.

    Additionally, while in general markets tend to under provide public goods in a theoretical free market experimental and behavioral economis suggest that this under provision is subject to context. Thus, while a public good may be a necessary condition for government intervention in the economy it may not be sufficient.

    Personally, I’d prefer a necessary and sufficient criterion for government intervention.

    charles, that’s nonsense — you get a few warlords in a place like Somalia (rich in relation to their peers), but no true ‘rich’ people by our standards – precisely because it’s impossible to become and/or stay rich there.

    Actual some anarcho-capitalists have argued that the Old West characterized, to a large degree, a stateless society where “law enforcement” was often privately provided (e.g. Pinkertons). Murray Rothbard argues that Pennsylvania fell into anarchism and was not a period of endless violence with Mad Max roaming the roads in the last of the V8s.

    If for most of 1684—88 there was no colonywide government in existence, what of the local officials? Were they not around to provide that evidence of the state’s continued existence, which so many people through the ages have deemed vital to man’s very survival? The answer is no. The lower courts met only a few days a year, and the county officials were, again, private citizens who devoted very little time to upholding the law. No, the reality must be faced that the new, but rather large, colony of Pennsylvania lived for the greater part of four years in a de facto condition of individual anarchism, and seemed none the worse for the experience. Furthermore, the Assembly passed no laws after 1686, as it was involved in a continual wrangle over attempts to increase its powers and to amend, rather than just reject, legislation.

    [...]

    William Penn had the strong and distinct impression that his “holy experiment” had slipped away from him, had taken a new and bewildering turn. Penn had launched a colony that he thought would be quietly subject to his dictates and yield him a handsome profit. By providing a prosperous haven of refuge for Quakers, he had expected in turn the rewards of wealth and power. Instead, he found himself without either. Unable to collect revenue from the free and independent-minded Pennsylvanians, he saw the colony slipping gracefully into outright anarchism—into a growing and flourishing land of no taxes and virtually no state. Penn frantically determined to force Pennsylvania back into the familiar mold of the old order.

    [...]

    The colonists were evidently content in their anarchism, and shrewdly engaged in nonviolent resistance against the commission. In fact, they scarcely paid any attention to the commission. A year passed before the commission was even mentioned in the minutes of the Council. News about the commission was delayed until the summer of 1687 and protests against the plan poured in to Penn. The commissioners, and the protesters too, pretended that they had taken up their posts as a continuing executive. Finally, however, Penn grew suspicious and asked why he had received no communication from the supposedly governing body.

    Unable to delay matters any longer, the reluctant commissioners of state took office in February 1688, a year after their appointment. Three and one-half years of substantive anarchism were over. The state was back in its heaven; once more all was right with the world. Typically, Penn urged the commissioners to conceal any differences they might have among themselves, so as to deceive and overawe the public: “Show your virtues but conceal your infirmities; this will make you awful and revered with ye people.” He further urged them to enforce the king’s duties and to levy taxes to support the government.

    Like or Dislike: Thumb up 0 Thumb down 0

  18. charles, that’s nonsense — you get a few warlords in a place like Somalia (rich in relation to their peers), but no true ‘rich’ people by our standards – precisely because it’s impossible to become and/or stay rich there.

    Nonsense? What exactly does rich mean except wealth in relation to ones peers? So you’ve figures out that you can’t apply US standards to Somalia? Color me unimpressed.

    The fact is that every society that has ever existed has had supremely privileged people and supremely unprivileged people. What you want to call them is irrelevant. The great success of Western Civilization has been in making it possible for most of the population to fall somewhere between these two extremes.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Brett says:

    The fact is that every society that has ever existed has had supremely privileged people and supremely unprivileged people. What you want to call them is irrelevant. The great success of Western Civilization has been in making it possible for most of the population to fall somewhere between these two extremes.

    I agree. If you look at most of history, without even the semblance of anything resembling a court system or law-and-order in a “large” society (small groups, like towns of under 500 people, don’t generally count because you still have some of the small-group-conformity mechanisms like shame and the like working), what you basically get is some form of feudalism. That can range from actual feudal lords in “agreements” with their subjects to provide security in exchange for a usually large share of their economic output, to modern mafia-style arrangements where the “protection” usually bleeds over into extortion.

    I’d question the relevance of the late 17th century example, Steve. Virtually everything about that era was different, ranging from much more of the population farming and/or living in small communities, to the slow on-land transit times (AKA horse-and-cart), and the customs that sprung up around them. Can you imagine that working in a modern society, where problems cross thousands of miles, most of the population live in large towns or cities with at least tens of thousands of people in the populations, and both transit and communication are rapid?

    Like or Dislike: Thumb up 0 Thumb down 0

  20. Steve Verdon says:

    I’d question the relevance of the late 17th century example, Steve. Virtually everything about that era was different, ranging from much more of the population farming and/or living in small communities, to the slow on-land transit times (AKA horse-and-cart), and the customs that sprung up around them. Can you imagine that working in a modern society, where problems cross thousands of miles, most of the population live in large towns or cities with at least tens of thousands of people in the populations, and both transit and communication are rapid?

    How about stating it this way?

    We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become

    Like or Dislike: Thumb up 0 Thumb down 0

  21. Bithead says:

    Perhaps we get ahead of ourselves.
    Before we decide questions like law being needed for the good of society, perhaps we’d best re-examine the purpose of “society” and “good”? Seems to me the only way to determine what the law should be to attain those goals.

    At it’s most basic, what is the purpose of society, and how does the individual factor into that? Does society operate to service and better the individual, or is the reverse true?

    Like or Dislike: Thumb up 0 Thumb down 0

  22. Brett says:

    At it’s most basic, what is the purpose of society, and how does the individual factor into that? Does society operate to service and better the individual, or is the reverse true?

    I wouldn’t say it’s an either-or decision – many would argue that things that help the individual are good because they help society as a whole, and vice versa. If I had to pick one, though, I would say that society has a duty to operate for the best welfare of the greatest aggregate of its citizens in the long-term (usually mean intergeneration-ally). Usually, I think that takes a form of what I’ve heard called “Rule Utilitarianism”, which says that groups set up rules designed to promote greatest happiness for the greatest number (as distinct from simple Act Utilitarianism).

    We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become

    I’d say it’s more that the restrictions are out in the open, on paper, and backed up by officially set-up mechanisms with unofficial support and assent by most of the population. Individuals in smaller or less advanced groups generally had plenty of restrictions on their freedom to act, but they were usually a combination of culture, belief, and the forces of conformism that work to keep the small groups that characterized human society for tens of thousands of years before the current ten thousand years together.

    Like or Dislike: Thumb up 0 Thumb down 0

  23. Bithead says:

    I wouldn’t say it’s an either-or decision – many would argue that things that help the individual are good because they help society as a whole, and vice versa. If I had to pick one, though, I would say that society has a duty to operate for the best welfare of the greatest aggregate of its citizens in the long-term (usually mean intergeneration-ally).

    And that, I insist, goes to the individual. When the focus is on supporting the rights of the individual, society invariably benefits. When we focus on “the greater good” the individual suffers, and ultimately the entire society suffers. So it was in the Soviet Union for example.

    Like or Dislike: Thumb up 0 Thumb down 0

  24. Bithead says:

    Which, I should add, in an effort to tie this back to the original post, there’s very heavily on tax policy. Does a progressive tax policy aide to the individual or does it lean forward “the greater good” ?

    Like or Dislike: Thumb up 0 Thumb down 0

  25. M1EK says:

    The rule of law may be a public good, but the rich benefit from it disproportionately. And, no, charles, the ‘rich’ in Somalia aren’t a counterexample – they have to spend so much of their ‘wealth’ on security and other things the rule of law provides for free. Like, to a lesser extent, the rich must do in Mexico.

    But if you guys like that kind of society, don’t let the door hit you on the way out.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. Bithead says:

    So, Cuba would be better? After all, they HAVE no ‘Rich” there.

    Like or Dislike: Thumb up 0 Thumb down 0

  27. Brett says:

    So, Cuba would be better? After all, they HAVE no ‘Rich” there.

    I’d take Cuba over Somalia.

    Like or Dislike: Thumb up 0 Thumb down 0

  28. Bithead says:

    And how are either of them free?

    Like or Dislike: Thumb up 0 Thumb down 0