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Reich writes: "I had a radio debate with another Republican economist who trotted out the Republican's favorite statistic - that the top-earning 1 percent of Americans pays about 38 percent of all federal income taxes. Therefore, he argued, we shouldn't raise taxes on the top. This argument is misleading, for five reasons."

Robert Reich. (photo: Perian Flaherty)
Robert Reich. (photo: Perian Flaherty)


Ordinary Americans Pay More in Taxes Than the Wealthy

By Robert Reich, Robert Reich's Facebook Page

25 October 15

 

his morning I had a radio debate with another Republican economist who trotted out the Republican's favorite statistic – that the top-earning 1 percent of Americans pays about 38 percent of all federal income taxes. Therefore, he argued, we shouldn’t raise taxes on the top. This argument is misleading, for five reasons.

1. The top 1 percent pulls in about 20 percent of all income. So in a progressive tax system, the top 1 percent would obviously pay a higher percentage than they’re raking in. The question is how much more. Between 1945 and 1980 the top rate was never below 70 percent. Now it's close to 39 percent.

2. Because we don’t have a wealth tax, the income tax is the only real vehicle we have for controlling vast accumulations of wealth – now accumulating far faster at the top than at any time in the last century. The richest 0.1 percent of Americans have now accumulated as much wealth as the bottom 90 percent put together.

3. Most other Americans pay a much larger percent of their pay in Social Security taxes than do wealthy Americans, because no income above $118,500 is subject to Social Security -- while even the first dollar of income is subject to it (7.65 percent for an employee, 15.30 percent for the self-employed). And Social Security tax revenues go to the same general fund that income taxes go into and are used to pay all federal expenses.

4. Most other Americans pay a far larger percentage of their pay in state and local sales taxes than do wealthy Americans. Sales taxes are on the rise, reaching 9 percent in many states.

5. All told, the typical American now pays a larger percent of his or her paycheck in taxes than wealthier Americans. Yet the typical American has seen no increase in his or her incomes since 2000, adjusted for inflation, while those at the top have taken in almost all the economic gains.

It's important that you have this information to counter the Republican lies. Know the truth and spread it.

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