Monday, October 27, 2008

Middle-Fifth Tax Burden: Lowest Level in Decades

Congressional Budget Office (CBO) data show that the total effective federal tax rate of the middle fifth of households declined after 2001 to its lowest levels since at least 1979, Congressman Jim Saxton, ranking member of the Joint Economic Committee, said today. Under the 2001 and 2003 tax relief legislation, the income tax as a share of income for the middle fifth also has fallen to its lowest levels in decades (see chart above, click to enlarge).

In 2005, the CBO data indicate that in the middle fifth, the total effective tax rate -- the share of federal taxes as a percent of income -- was 14.2%, while the effective individual income tax rate was 3.0%. These figures compare to 2000 levels of 16.6% and 5.0%, respectively. Between 2003 and 2005, the total effective tax rate for the middle fifth edged up, but still remained far below the levels of the previous 24 years.

“The CBO analysis shows that the 2001 and 2003 tax cuts have lowered the tax burden on middle income taxpayers to the lowest levels since at least the late 1970s,” Saxton said. “The CBO tax figures, put into historical perspective, also show that the income tax burden of middle income households has been reduced to its lowest levels in many years,” Saxton concluded. The total effective tax rate includes income, payroll, and excise taxes. The CBO tax numbers do have limitations, and it should be recalled that most households do not remain in a specific quintile for extended periods of time.

~From the Joint Economic Committee of Congress (no link available yet)

MP: Note that the total effective tax rate on the middle-income taxpayers was above 17% during most of the 1990s, and fell below 14% in 2003, and then rose slightly to 14.2% in 2005.

17 Comments:

At 10/27/2008 6:39 PM, Anonymous Dr. T said...

Of note is that the tax burden includes employee and employer Social Security taxes.

The federal tax burden on middle class households is surprisingly low (given how big our government has grown). Since the majority of the middle class supports the continued growth of government and entitlements, they should stop bitching about how much tax they pay. (As you can guess, I'm in the upper fifth whose taxes pay for most of the government.)

 
At 10/27/2008 6:43 PM, Anonymous Anonymous said...

The latest CBO data is here.

The total effective federal tax rates of all quintiles has declined since 2000. The all quintile rate declined from 23% in 2000 to 20.5% in 2005.

Saxton could have also said: The CBO analysis shows that the 2001 and 2003 tax cuts have lowered the tax burden on all taxpayers to the lowest levels since at least the late 1970s.

Can you spell D-E-F-I-C-I-T-S, Jim?

 
At 10/27/2008 7:10 PM, Blogger bobble said...

This comment has been removed by the author.

 
At 10/27/2008 7:18 PM, Blogger bobble said...

"Middle-Fifth Tax Burden: Lowest Level in Decades"

what about the federal debt?

Highest Level in Decades

i'm all for tax cuts, but either they have to "pay for themselves" (never happened yet) or spending has to be cut. why is it our big tax cutters are also our big spenders?

as it stands now, the tax cuts were just a loan from our children and grandchildren.

and what did we get? below average job creation, stagnant income, and a &$%#'ed up economy.

thanks for nuthin', dubya, good-bye and good riddance!

 
At 10/27/2008 7:45 PM, Anonymous qt said...

Dr. T,

Alternately, the complainers could come to Canada where tax freedom day falls in the middle of June instead of April.

Given that our national sport is complaining...about the weather, politics, Americans..the weather.
Seems like a good fit. :0

 
At 10/28/2008 4:00 AM, Blogger OBloodyHell said...

> Highest Level in Decades

Not as a percentage of GNP, which is apples-to-apples, rather than straight up numbers, which is comparing apples to oranges.

And frankly, bobbie, if you'd been paying ANY attention around here, you'd know what a load of crap your comment was.

Calling attention to the deficits is one thing, of some relevance and value -- anon did this.

Your comment was just flat-out stupid and ignorant.

As is this:

> thanks for nuthin', dubya, good-bye and good riddance!

Look this is the fault of CONGRESS, not the PotUS, and this is 9th-grade Civics. But you slept through that class, didn't you?

Your next comment would be "blame the GOP" but I got news: the Dems have been in charge for two years now, and they ain't cutting JACK and aren't tackling any problems, so let's make it a non-partisan blame.

BOTH parties have been behaving like drunken frat boys with daddy's unlimited credit card.

But as far as the PotUS goes, I know which ones' going to take it more seriously, and his name comes before the other major candidate on an alpha listing.

 
At 10/28/2008 8:00 AM, Anonymous Anonymous said...

"Your comment was just flat-out stupid and ignorant.
As is this:
> thanks for nuthin', dubya, good-bye and good riddance!"

Have to agree with OBH. Bobble falls in with the rest of the "sheep" who think that just because a candidate can eloquently bitch about the way things are and misdirect blame for it, that candidate must somehow also have the answers. That was the general impression people had of Carter...I don't think I need to expound on what poor leadership was demonstrated during that administration.

But people are so "anti-Bush" that they perceive any alternative will be better. It's like people eating roast beef every day for the last 8, 12, 16 years, and finally deciding that the roast beef has gotten steadily worse over that time, although in reality, it's not the best or worst of roast beef they've ever eaten.

But someone comes along, offers them something other than roast beef between 2 pieces of bread and they get so excited over the excellent marketing campaign behind it, they fall all over themselves with excitement to buy it even though they really have no idea what it is. Only after they are two bites into their brand new sh_t sandwich will they start to realize how good that roast beef really was. I guess if the polls are right, we'll all be eating a sh_t sandwich for the next 4 years longing for the days of roast beef.

 
At 10/28/2008 9:34 AM, Anonymous RebelRenegade said...

bobble, I have a question for you.

Are you being serious? If not, I applaud your attempt at comedy, even thought it was sub-par.

If so, I genuinely feel bad for you.

 
At 10/28/2008 10:52 AM, Anonymous Anonymous said...

I will unequivocally rush to bobble's defence when it comes to the federal debt/GDP ratio and second the motion to wish dubya all the success on the "Crawford Ranch" in Paraguay.

Bush assumed office on January 21, 2001, when the federal debt was $5.7 trillion. Today, it is in excess of $10.5 trillion.

One can play to their heart's content with the debt to the penny updated each business day.

Now the sophisticated data hounds among you would say, so what; but concede that the federal debt increased by 85% under the rule of the imperial child, aka dubya. Of course, a nominal percentage is meaningless unless it is put in context.

The context for the data dogs of war is this. The debt/GDP ratio in January 2001, was 57% and the ratio today is 72%.

Are you better off than you were 8 years ago?

Parenthetically, did dubya teach his daughters to balance a cheque book? Probably not.

 
At 10/28/2008 11:02 AM, Anonymous Anonymous said...

anon 10:52 said,"Parenthetically, did dubya teach his daughters to balance a cheque book?"

Amazing that he was able to single-handedly do all that damage to the national debt, what with the thrifty Democratic majority in congress working so diligently to reign in spending...oh, hell. I'm sorry. I tried but I can't say that with a straight face.

You're right, it's easier (and you don't have to tax your brain by actually thinking about it too much) just to blame the administration. Let's just do that...it's so much more convenient than the truth.

 
At 10/28/2008 11:43 AM, Anonymous Anonymous said...

The repubs controlled Congress from 2000 to 2006. You could look it up, anon 11:02.

The imperial child, dubya, didn't take his civics lessons, did he OBH? It's called the veto. Dubya never exercised his veto power during his first term when the repugs controlled the legislature.

Dubya finally got off the imperial throne to exercise veto post November 2006. You could further look it up, anon 11:02.

 
At 10/28/2008 12:38 PM, Anonymous Anonymous said...

"The repubs controlled Congress from 2000 to 2006. You could look it up, anon 11:02."

What are you...Donny Baker?

 
At 10/28/2008 12:47 PM, Anonymous Anonymous said...

"The repubs controlled Congress from 2000 to 2006."

I'm sorry...at first you blamed the President. Then you seem to shift the blame to Republicans in congress, then back to the President. So basically your invective is against Republicans in general (?). Just trying to get a handle on your position.

Thank God the Dems had nothing to do with this current financial mess. I am sure they sleep well at night knowing they did their dead-level best to improve oversight of the Fannie/Freddie debacle when the Republicans brought the matter up several years ago.

 
At 10/28/2008 1:11 PM, Blogger bobble said...

OBH obloviates:"Not as a percentage of GNP . . . Your comment was just flat-out stupid and ignorant."

you're wrong, as usual, OBH.

since you seldom back up any of your dubious assertions with credible evidence, i'll provide some for you:
this shows federal debt as percent of GDP (i don't think many people use GNP anyore).

you'll also notice that the majority of the national debt, 2000-2006, was under repubican president and congress.

now, go crawl back to your bunker and wash your camoflage gear.

anon 8:00am "Bobble falls in with the rest of the "sheep" who think that just because a candidate can eloquently bitch about the way things are and misdirect blame for it, that candidate must somehow also have the answers."

are you implying i support obama?

where or when did ever say i liked obama? i dislike bush II and the neocons.

i wish everyone on this board would stop assuming that i'm a liberal democrat. i voted republican until bush II, cheney, and the neocons hijacked the republican party.

i'm middle of the road, and apparently this board is so far to the right that middle of the road looks like FDR to them

 
At 10/29/2008 11:52 AM, Blogger Marko said...

What is the salary range for middle 5th?

 
At 10/30/2008 2:27 AM, Anonymous djaces said...

Though the rates of tax paid have gone down tax revenue has grown almost continuously since the Bush tax cuts. The deficits aren't from reduced taxes, but from everyone in DC spending our money like sailors on shore leave. Since the payroll taxes amount to over 14% these figures would seem to indicate that the mid quint is paying on average zero income tax.

 
At 12/08/2008 4:09 AM, Blogger MV said...

"what about the federal debt?

Highest Level in Decades"

Bobble, of course it's the "highest level in decades." The debt goes up every year there is a deficit. The deficit shrunk from 2003-2007, however, as tax revenues increased.

"The repubs controlled Congress from 2000 to 2006. You could look it up, anon 11:02"

I think the point is that neither party reigned in spending. I'm also pretty sure I can blame democrats and some republicans for the current recession. Hell, I'll blame all of congress because nobody did anything.

"since you seldom back up any of your dubious assertions with credible evidence, i'll provide some for you:
this shows federal debt as percent of GDP (i don't think many people use GNP anyore).

you'll also notice that the majority of the national debt, 2000-2006, was under repubican president and congress."

Why would you ever cite a source that says this?

"Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion:
1. He lowered taxes on the rich (by far the biggest item).
2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).
3. He deregulated Wall Street speculators. That bailout has now "invested" $1T"

Here's what happened: stock market crashed, recession happens, Bush inherits recession, Bush proposes tax cuts in 2001 and 2003, massive growth happens as US comes out of recession, deficit is cut in half by 2006 and more than half by 2007. Bush lowered taxes, but higher tax receipts followed. So, that can't be it. The war sure is costly, so that could be a factor in it. However, he did NOT "deregulate" Wall Street. The act passed in 1999 signed by Clinton made way for riskier loans. The Bush Administration warned of the FMFM meltdown because of improper government oversight. But alas, no one listens.

Furthermore, Clinton did not have a surplus. Those numbers do not count in massive liabilities from retiree benefits. It was still a deficit then.

The End.

 

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