Liberals are running around today saying that “the rich” are not “paying their fair share” because in the 1950s they paid far more when the federal rate was 91 percent. But a recent look at tax data shows that the rich today ARE NOT paying that much less than when the rate was so high.
It all amounts to another left-wing lie expose.
The new look at taxes and how much the top one percent pays was put out by the Tax Foundation which calculated the relative amount of taxes paid by also adding in all the city, county, and state taxes to the federal tax rate paid.
The group tallied all taxes paid by the top earners since 1915 and found that in 1950 the top one percent paid 42 percent of their income in taxes when the federal rates were 91 percent. Today, with much much lower federal rates, it turns out that the top one percent pays 36.4 percent of their income to taxes. That is only a difference of six percent over the same sector paid in 1950.
According to the Tax Foundation:
The data shows that, between 1950 and 1959, the top 1 percent of taxpayers paid an average of 42.0 percent of their income in federal, state, and local taxes. Since then, the average effective tax rate of the top 1 percent has declined slightly overall. In 2014, the top 1 percent of taxpayers paid an average tax rate of 36.4 percent.
All things considered, this is not a very large change. To put it another way, the average effective tax rate on the 1 percent highest-income households is about 5.6 percentage points lower today than it was in the 1950s. That’s a noticeable change, but not a radical shift.
The Foundation explained its process for calculating the percentage this way:
The 91 percent bracket of 1950 only applied to households with income over $200,000 (or about $2 million in today’s dollars). Only a small number of taxpayers would have had enough income to fall into the top bracket – fewer than 10,000 households, according to an article in The Wall Street Journal. Many households in the top 1 percent in the 1950s probably did not fall into the 91 percent bracket to begin with.
Even among households that did fall into the 91 percent bracket, the majority of their income was not necessarily subject to that top bracket. After all, the 91 percent bracket only applied to income above $200,000, not to every single dollar earned by households.
Finally, it is very likely that the existence of a 91 percent bracket led to significant tax avoidance and lower reported income. There are many studies that show that, as marginal tax rates rise, income reported by taxpayers goes down. As a result, the existence of the 91 percent bracket did not necessarily lead to significantly higher revenue collections from the top 1 percent.
So, once again, the liberals are lying to you, America.
Follow Warner Todd Huston on Twitter @warnerthuston.