The View From The Top

What do the rich think about taxes, specifically their own taxes?  The chart below provides a picture of tax rates by income.   The most obvious point is that starting in the 1980s federal tax rates have been converging, with the very richest enjoying significant declines.   Of course, not only have these people benefited from ever lower tax rates, they have also enjoyed ever larger gains in pre-tax income.   

For the record: in 2004, you needed an income of at least $250,995 to make the top 1%, $837,892 to make the top 0.1%, and $3,642,236 to make the top 0.01%.  Of course these are just minimum values; the average income of those in the top 0.01% was $18,113,612.   


Given this trend in tax rates, you might think that the rich would be relatively content with their declining tax burden.  If you did, you would be wrong. 

A Gallup study asked individuals what they thought about their income taxes.  As the table below shows, those individuals in the richest households were by far the most unhappy with their tax burdens.  In fact, this top income group was the only one with a majority declaring that its tax burden was unfair.  For reference, those households earning $250,000 or more comprised the wealthiest 2% of all households.


There is certainly a lot of talk about the federal deficit and the need to reduce it.   If we are serious about doing this in a responsible way there is no getting around the fact that we are going to have to make the richest households pay more.   We can generate real money by letting the Bush tax cuts expire on households earning more than $250,000, adding a special millionaire tax bracket, boosting the inheritance tax on the very richest, and — well you get the idea.  For some estimates of revenue gains check out this article.  And then there are the corporations.  

As the table below makes clear, the Gallup study also found that most Americans appear on board with taxing the rich and the corporations: 59% of respondants believe that upper income people are paying too little and 67% believe the same about corporations.  


There may be hope yet.


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