The Congressional Budget Office (CBO) just released its latest estimates on the share of taxes paid by income level, giving voters a way to check the argument that the rich do not pay “their fair share.”
You will see a lot of news on this report. What you are unlikely to see, though, are these facts from the CBO report:
- On just federal-level taxes, the top 1 percent of income earners already have an effective tax rate of 29 percent. (This should please Warren Buffett!)
- President Obama has achieved his goal of increasing redistribution: The top 20 percent has seen its after-tax share of total income fall, especially the top 1 percent, while the lower income groups have seen their share rise.
- The top 1 percent pays well over its “fair share”—it pays a much larger share of taxes (22.3 percent) than the share of income it earns (13.3 percent)—as does the full top 20 percent. Meanwhile, the bottom income groups pay a much smaller share of taxes than their share of income: The bottom 40 percent earned 14.9 percent of income but paid just 4.1 percent of federal taxes. (See chart)
So when the President and the his supporters complain that the rich are not paying their fair share of taxes, and Warren Buffett suggests another tax to ensure that they start paying more, someone should show them this government report. If the argument is that America must ensure that the rich pay, it must just be rhetoric—because they are already paying.