In 3 Charts You'll See Why The Rich Are So Obsessed With Taxes

diamond earing woman

There’s an excellent new paper on “The 1%” by Facundo Alvaredo, Anthony Atkinson, Thomas Piketty and Emmanuel Saez out today on NBER. 

The paper is about what policies and trends have allowed the 1% to swell into such a powerful bloc.

The paper is already the source of a number of great charts, but there’s three in particular that really hammer home why there is such an obsession among the rich for lower taxes. 

You’re talking about a group that willingly spends millions every couple of years to try to get a preferred individual in a position of power to change taxes. 

For starters here’s a look at the top tax rates in the U.K., France, the U.S. and Germany. 

The dark lines – an upside-down U-shape  — represent the U.S. and U.K. top rates. Notice how they started low early in the 20th century, rose upward to over 90% of income, then crashed back down. 

The white lines — France and Germany — started out low, rose significantly, then remained relatively flat. It’s shaped like an upside-down capital L. (Γ)

one per cent income disparity chart

Now, let’s look at France and Germany again. Notice how the income shares of the top 1% in Germany and France — the lines with the circles — follow an L-pattern. Compare that with the upside-down L of their tax rates:

one per cent income disparity chart


Now let’s look at the U.S. and U.K.  Notice how the income share of the top 1% in the U.S. and U.K. follow a U-shape. Compare that with the upside-down U of their tax rates. 

one per cent income disparity chart

So, what can we see?  

There’s an inverse relationship between the top tax rate in an industrialized nation and the share of income held by the 1%. 

When you see the very wealthy lobbying to cut taxes, understand that there’s an ulterior motive. They’re remembering the fifties, when they controlled the lowest per cent of the income share and paid the highest taxes. 

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