Wednesday, March 05, 2008

About That Middle-Class Squeeze

From today's IBD:

Democrats seem unable to stop themselves from promoting higher taxes for the wealthy and lower taxes for the poor. But if the public knew the facts, their rhetoric would have no resonance.

As the chart above shows (click to enlarge), the effective tax rate for middle-class Americans has fallen since the late 1970s. While that was happening, the median after-tax household income jumped by more than a quarter. Taxes down, incomes up. No question — we're all doing better.

Despite this news, readily available, the two remaining Democratic presidential candidates talk as if the rich are the only group getting tax breaks, while support from Washington for the poor has fallen and the middle class is being crushed out of existence.

What more do the Democrats want? Under the Bush tax cuts, the top 1% paid 39.4% of federal income taxes in 2005, up from 37.4% in 2000 and 30.3% in 1995, when the Clinton administration was in charge and had pushed a tax hike through a Democratic Congress.

As for the bottom 50%, they paid 3.1% of federal income taxes in 2005, down from 3.9% in 2000 and 4.6% in 1995. You can see the decline in tax rates under Bush for yourself (see chart below). The Bush tax cuts have been good for every taxpayer in the country, not just the rich.


At 3/05/2008 6:31 PM, Anonymous Anonymous said...

Bush administration was nothing more than enriching the oil and defense industries at the expense of the country. The only competent Treasury Secretary didn't last long once he started telling people that Generalissimo Bush was looking for a way into Iraq from day 1.

At 3/05/2008 7:44 PM, Anonymous Anonymous said...

Puhleeze. The effective tax rate of every household declined. The after-tax money (not the percentage decline) landed in the hands of the upper quintile. Now look at the budget deficit from 2000-2005. Hmmm... the deficit money landed in the hands of the upper quintile. Hmmm....effective tax rate reductions are a sop to the upper quintile.

In other words, show me the money.

At 3/05/2008 8:31 PM, Blogger JMS said...

Everytime you see these figures, remember that this is per *household*.

The higher quintiles are almost all two-earner households, the lowest is b/w 0-1 on average.

Thus, the incomes of the higher quintiles isn't that much higher per working individual, but the tax rates are much higher.

At 3/05/2008 9:43 PM, Anonymous Anonymous said...

Hum..look at the graph again...

In Reagan-Bush I years, the median household income stayed the same (went down and then went up) ~0% growth

In Clinton years (1992-2000), the median household income went up by ~17%

In Bush-II years (2001-2007) the median household income went up by ~4%


At 3/06/2008 7:45 AM, Blogger juandos said...

Hmmm, funny how the clueless whiners here (anons @ 6:31 PM and 7:44 PM) never whine about the costs associated with the socialist nanny state programs that are far more expensive than the Bush tax cuts...

The Tax Foundations notes how much more was extorted from the citizens in the form of taxes under Clinton as compared to Bush...


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