Sunday, September 2, 2012

Distribution of Federal Taxes and Household Income

Good information from the Congressional Budget Office regarding household income and federal taxes.  You can read the full report here or just check out these highlights.

CBO: The Distribution of Household Income & Federal Taxes 2008 & 2009
Click to enlarge
Some interesting takeaways:

1.  There is a notion that the rich have armies of accountants and lawyers working for them which keep them from paying much in the way of taxes.  The above information shows this to be false.  In 2009, the top two quintiles (top 40%) paid 86.2% of all federal taxes while the bottom quintiles (bottom 40%) paid 4.1%.  Even more striking is to isolate just the top and bottom quintiles with the top 20% paying 67.9% of federal taxes and the bottom 20% paying .3%.

2.  It seems the rich were statistically hit hardest by the recession.  The percentage change in average after tax income from 2007 to 2009 were: -17% top quintile, -2% fourth quintile, -2% middle quintile, -1% second quintile, +3% lowest quintile.  Why did the lowest quintile actually do better?  I'm not really sure.  Obviously it had to do with changes in the tax system but what those changes were I do not know off hand.
(Note: When I say that the rich were statistically hit hardest I am trying to convey that I am only discussing the numbers in this report.  In reality, people are not tied to one income tier and it is very likely that many people who had higher paying jobs were laid off due to the recession and had to settle for something which moved them to a lower quintile.)

No comments:

Post a Comment