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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: JBTFD who wrote (33769)	11/8/2012 9:52:37 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 85487

The CBO link in the first blog post worked when the post was made back in 2009. The 2nd blog post has a newer link that works now. cbo.gov The methodology in the first blog post is simple. Add up all the federal taxes of all types paid by people in particular income groups, and divide by the income for that group. The 2nd post has more complex methodology in that it includes transfers. Whether you include transfers or not the rich have long paid much more then their share of income in federal taxes, and that is both of all federal taxes (including payroll taxes) or just personal income tax. And that's without taking any of the following facts in to consideration. 1 - Capital gains (which represent a larger percentage of the income of the rich) are not adjusted for inflation, so the actual rate paid is often much higher then the headline right (and is sometimes a divide by zero error when you pay taxes on a real loss). 2 - Capital gains are often on stock. Stock represents part ownership of a company. Company paid taxes are in effect paid by the stockholders. 3 - The rich are more likely to own tax free munis. Such instruments pay less then non-tax free instruments. The effective subsidy* is more from the feds to municipalities, but the CBO and Mankiw's calculations treat it as an effective subsidy to the rich, who don't actually receive much of an effective subsidy as they get lower returns in lieu of taxes. * I use "effective subsidy' consistently in that last point because letting people keep more of their own money isn't subsidizing them, but it does have an economic effect similar to that of subsidizing them.