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Average Federal Income Tax Rates By Income Group Are Highly Progressive, Not Regressive

Professor Mark J. Perry  
August 15, 2011 2:53pm   Comments
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"...Blessings are showered upon [the super-rich] by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It's nice to have friends in high places. 
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice."

Dan Mitchell makes several good points today on his blog about the "Oracle of Omaha's" fiscal innumeracy including:

1. Instead of just talking all the time about how he should pay higher taxes, it's time for Warren Buffett to really get serious about "shared sacrifice" by paying higher taxes.  He doesn't have to wait for Congress to change tax rates, he can start sending voluntary tax payments right now to the government at the website that Dan provides.  If Mr. Buffett thinks that he should pay 36% of his income in federal taxes like the employees in his office, he can make that happen immediately by making a $7.4 million gift to the U.S. Treasury.  And he can use his influence to encourage his super-rich friends to do the same. 

2. Dan writes that "Buffett mischaracterizes the impact of the Social Security payroll tax, which is dedicated for a specific purpose. The law only imposes that tax on income up to about $107,000 per year because the tax is designed so that people “earn” a corresponding  retirement benefit (which actually is tilted in favor of low-income workers)."

MP: Using 2008 IRS data, the chart above shows that the U.S. federal income tax system is highly progressive (as it's intended to be, and not regressive as Buffett wants us to believe from his "analysis" of his employees' tax rates) and higher income groups pay taxes at a higher rate on average, as a share of their taxable income.  Although Buffett himself might be an exception, those taxpayers in his "super-rich" group (top 1%) pay federal taxes at the highest rate (23.3%) of any other income group. For the bottom 50% of taxpayers with adjusted gross incomes of $33,000 or less, the average federal income tax rate for that group is only 2.6%.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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Posted-In: federal tax income groups Warren BuffettTopics General