It Wasn't a Tax Cut for "The Rich," It Was a Tax Hike
- For 2005, the richest 1% paid about 39% of all income taxes that year (see chart above).
- The richest 5% paid a little less than 60%, and the richest 10% paid 70%.
- The richest 1.3 million tax-filers -- those Americans with adjusted gross incomes of more than $365,000 in 2005 -- paid more income tax than all of the 66 million American tax filers below the median in income; ten times more.
For the political left and most of the media, this means only that the rich are getting richer. However:
- The rich showed more rapid gains in reported income shares in the 1990s than in the first half of this decade.
- The share of the richest 1 percent jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005.
- Notably, however, the share of taxes paid by the top 1% has kept climbing this decade -- to 39.4% in 2005, from 37.4% in 2000.
- The share paid by the top 5% has increased even more rapidly.
In other words, despite the tax reductions of 2001 and 2003, the rich saw their share of taxes paid rise at a faster rate than their share of income. This makes it hard to pin their claim of "rising inequality" on the Bush tax cuts, though the income redistributionists are trying. By this measure, the Clinton years were far worse for "inequality."
Conclusion from the WSJ: "We hate to break up the media's egalitarian chorus with these details, but facts are facts. If Democrats really want to soak the rich, they'll keep tax rates where they are, or, better, lower them some more."