Top 0.1% Pay more Tax than Bottom 80%
Note to Subscribers: Starting this week I’m doing a video round-up of the numbers that matter for the economy and liberty. Including the short-and-snappy version of today’s article, plus half a dozen numbers to shock, entertain, and occasionally horrify. Scroll to the bottom to watch.
New IRS data says the top 0.1% of taxpayers — one in a thousand — pays more than the bottom 80% of taxpayers.
Turns out we’re eating the rich after all.
That comes to 210 times their “fair share.” Essentially, 210 people drinking but the bartender hands one guy the check. With a lecture about privilege.
This comes from new IRS data finding the top 0.1% of taxpayers -- roughly 154,000 returns -- paid $440 billion in their most recent year.
That compares to just $350 billion for the bottom 80% of taxpayers -- which is pretty much everybody else.
It’s even more dramatic for the hated 1%, who pay nearly half of taxes despite earning just 1/5 of income.
Zoom out again and it gets downright comical: The top half of taxpayers cover 97% of the tab. The bottom half -- who alas vote -- paid just 3% of taxes.
So half the country is carrying the other half, plus Congress, plus 47,000 NGOs teaching sustainable Tesla dealership burning to sociology majors.
The Progressive Tax Racket
Interestingly, despite years of mainstream-media disinformation, the income tax has become dramatically more progressive. In 1980, the top 1% paid roughly 19% of federal individual income taxes. Today they pay almost 40%.
And this happened even though the top marginal income-tax rate fell from 70% in 1980 to 37% today.
Which seems counterintuitive until you consider lower tax rates encourage high-productivity people to work harder -- they don’t have to hand 70 cents to the IRS. That creates jobs, growth, and — yes — income. Which raises the amount of tax they pay even at the lower rate.
This is the famous Laffer Curve, named after one of Ronald Reagan’s favorite economists, Art Laffer. And the gist is tax 0% and you raise no tax, tax 100% and you raise no tax, there’s a sweet spot in the middle.
So going from 70% to 37% raised growth, raised taxes -- and dramatically raised the share of taxes paid by the rich. Suggesting perhaps we should try 20% tax. 10%. Perhaps no income tax at all, replaced with sales taxes that are far less destructive to growth and jobs.
Trust Funders of the Welfare State
Aside from the fairness question of one guy paying 210 bar tabs, there’s the political question that if most voters pay no tax that’s methamphetamine to leviathan that lives for tax hikes.
Especially when the new taxes are funding welfare, food stamps, and medicaid that now cover 74 million people who also, alas, vote.
Counting the benefits means the bottom 80% actually pays negative income tax -- they get more benefits than they pay in tax.
And those benefits have positively soared: In 1979 means-tested benefits covered 32% of income for the bottom fifth. That’s now 75% of income taken from people who actually worked for it.
This allows the poor to live a life of gentlemanly leisure, trust funders of the welfare state. According to the CBO, the highest-income fifth of married couples work on average 42 hours per week. The lowest-income fifth chill with just 25 hours a week -- part timers coasting on other peoples money.
What’s Next
We already have a tax system that places nearly the entire burden on the top earners, then hires tens of millions to sit on the couch and vote for more taxes, more welfare.
And more grift for the politicians.
And yet Progressives still beat the drums about making the rich pay their fair share.
Because it’s not about fairness, it’s about turning the rich into an endless ATM for the crony industrial complex, from bankers and military contractors to Learing centers, teachers’ unions, and NGOs.
The easiest solution is spread out taxes so every voter has a stake in the game. Ideally at a flat rate where everybody pays the same percent of income. Essentially, no representation without taxation. This keeps the rich paying more, but in a way that keeps Leviathan in check.
Of course both parties enjoy taking ever-greater shares of national wealth to squander. So Washington’s happy to play along that the prosperous will never pay their fair share.
And without further ado, the numbers that mattered this week
Enjoyed this article? Get the next one free.
Join 23,000 readers for weekly articles on the economy and freedom, with regular deep dives like the Fall of Rome, the Weimar hyperinflation, and FDR’s Great Depression.
Want to go further? Paid subscribers also get my monthly investment guide including real-money picks that have made 63.6% returns so far this year on a $100,000 portfolio.
See you Next Week!
Peter
Whose voice is this….Ai? Peter, do you not talk or have videos anywhere as the voice is brutal to listen to.
Switched over from X but liked your tone and the way you spoke about everything.
Thanks