OK, Folks, Let’s Put Aside Politics And Talk About Taxes… [CHARTS]

Income Share 50%

[credit provider=”Business Insider” url=”http://www.businessinsider.com.au/”]

Everyone’s fighting about taxes again, as the government tries to avoid the fiscal cliff.So, it’s a good time to review some tax facts.

Let’s start with these two:

  • Everyone hates taxes.
  • Everyone wants someone else to pay all the taxes.

Alas, we have a massive budget deficit, and most reasonable people agree that the only way to balance it will be to cut spending growth and pay more taxes.

So, who should pay them?

How much is too much?

What’s fair?

Those are all good questions.

So, let’s put aside politics for a few minutes and look at some facts…

[slideshow]
[slide
permalink=”a-preliminary-note-in-these-slides-we-will-be-talking-about-federal-taxes-federal-tax-revenue-as-you-can-see-is-still-going-up-1″
title=”A preliminary note: In these slides, we will be talking about FEDERAL taxes. Federal tax revenue, as you can see, is still going up.”
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[slide
permalink=”as-a-percent-of-the-economy-though-federal-tax-revenue-is-actually-well-below-average-only-17-of-gdp-2″
title=”As a per cent of the economy, though, federal tax revenue is actually well below average–only 17% of GDP.”
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[slide
permalink=”federal-spending-meanwhile-is-running-at-24-of-gdp-3″
title=”Federal spending, meanwhile, is running at 24% of GDP.”
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[slide
permalink=”so-we-have-a-massive-budget-deficit-4″
title=”So we have a massive budget deficit.”
content=””
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[slide
permalink=”to-fix-our-deficit-we-have-to-raise-taxes-as-a-percent-of-gdp-blue-andor-cut-spending-as-a-percent-of-gdp-red-and-given-that-there-are-320-million-of-us-were-going-to-have-to-compromise-a-little-of-both-5″
title=”To fix our deficit, we have to raise taxes as a per cent of GDP (blue) and/or cut spending as a per cent of GDP (red). And given that there are 320 million of us, we’re going to have to compromise: A little of both.”
content=””
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[slide
permalink=”okay-enough-about-spending-lets-talk-taxes-6″
title=”OK, enough about spending. Let’s talk taxes.”
content=””
image=”http://static.businessinsider.com/image/4e5bf5046bb3f7950100000e/image.jpg”
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[slide
permalink=”total-government-tax-revenue-green-is-broken-down-into-federal-tax-revenue-red-and-statelocal-tax-revenue-blue-7″
title=”TOTAL GOVERNMENT tax revenue (green) is broken down into FEDERAL tax revenue (red) and STATE+LOCAL tax revenue (blue).”
content=””
image=”http://static.businessinsider.com/image/5033ef6cecad04962c00000a/image.jpg”
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[slide
permalink=”total-federal-tax-revenue-red-is-composed-mainly-of-personal-taxes-blue-social-program-taxes-green-and-corporate-taxes-orange-were-going-to-talk-about-income-taxes-8″
title=”TOTAL FEDERAL TAX REVENUE (red) is composed mainly of PERSONAL taxes (blue), SOCIAL PROGRAM taxes (green) and CORPORATE taxes (orange). We’re going to talk about INCOME taxes.”
content=””
image=”http://static.businessinsider.com/image/5033ef3c69bedd8e5200000d/image.jpg”
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[slide
permalink=”the-top-income-tax-bracket-is-very-low-historically-speaking-9″
title=”The top income tax bracket is very low, historically speaking.”
content=””
image=”http://static.businessinsider.com/image/4e1c5b08ccd1d50779000000/image.jpg”
caption=””
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[slide
permalink=”okay-so-who-pays-the-income-taxes-in-this-country-10″
title=”OK, so who pays the income taxes in this country?”
content=””
image=”http://static.businessinsider.com/image/4fe8a7466bb3f76b35000002/image.jpg”
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[slide
permalink=”the-top-50-of-income-earners-pay-almost-all-of-the-income-taxes-in-this-country-the-bottom-50-pay-other-taxes-though-so-dont-freak-out-about-freeloading-11″
title=”The top 50% of income-earners pay almost all of the income taxes in this country. The bottom 50% pay other taxes, though, so don’t freak out about “freeloading.””
content=””
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[slide
permalink=”the-top-25-of-income-earners-pay-about-80-of-the-income-taxes-in-the-country-12″
title=”The top 25% of income-earners pay about 80% of the income taxes in the country.”
content=””
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[slide
permalink=”the-top-10-pay-about-70-of-the-income-taxes-13″
title=”The top 10% pay about 70% of the income taxes.”
content=””
image=”http://static.businessinsider.com/image/5033e47e6bb3f7ab5a000004/image.jpg”
caption=””
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[slide
permalink=”the-top-5-pay-more-than-half-of-the-income-taxes-14″
title=”The top 5% pay more than half of the income taxes.”
content=””
image=”http://static.businessinsider.com/image/5033e49ceab8ea7d7400000e/image.jpg”
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[slide
permalink=”and-the-top-1-pay-more-than-30-of-the-income-taxes-a-percentage-that-has-been-steadily-growing-over-time-you-can-see-why-the-top-1-complains-about-having-to-shoulder-too-much-much-of-the-tax-burden-15″
title=”And the top 1% pay more than 30% of the income taxes–a percentage that has been steadily growing over time. (You can see why the top 1% complains about having to shoulder too much much of the tax burden.)”
content=””
image=”http://static.businessinsider.com/image/5033e4e36bb3f79258000006/image.jpg”
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[slide
permalink=”here-are-the-income-taxes-paid-by-the-respective-income-percentiles-note-how-little-the-bottom-half-pay-blue-note-how-much-more-as-a-percentage-of-the-whole-the-top-5-are-paying-16″
title=”Here are the income taxes paid by the respective income percentiles. Note how little the bottom half pay (blue). Note how much more as a percentage of the whole the top 5% are paying.”
content=””
image=”http://static.businessinsider.com/image/5033e3e3ecad049417000002/image.jpg”
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[slide
permalink=”of-course-if-youre-in-the-top-1-that-means-you-have-a-lot-of-income-to-pay-income-taxes-with-the-top-1-in-2009-for-example-made-a-minimum-of-350000-apiece-the-top-5-made-more-than-150000-the-top-10-made-more-than-110000-and-so-on-the-bottom-50-meanwhile-made-less-than-30000-17″
title=”Of course, if you’re in the top 1%, that means you have a lot of income to pay income taxes with. The top 1% in 2009, for example, made a minimum of $350,000 apiece. The top 5% made more than $150,000. The top 10% made more than $110,000. And so on. The bottom 50%, meanwhile, made less than $30,000.”
content=””
image=”http://static.businessinsider.com/image/5033e69b69bedd763c000017/image.jpg”
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[slide
permalink=”when-you-put-all-those-incomes-together-american-taxpayers-made-just-under-8-trillion-in-2009-heres-how-the-income-bands-broke-down-as-a-percent-of-that-total-income-18″
title=”When you put all those incomes together, American taxpayers made just under $8 trillion in 2009. Here’s how the income bands broke down as a per cent of that total income.”
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image=”http://static.businessinsider.com/image/5033e26ceab8ea5674000000/image.jpg”
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[slide
permalink=”so-now-lets-look-at-how-that-income-distribution-breaks-down-not-surprisingly-the-top-50-make-the-vast-majority-of-all-the-income-in-this-country-19″
title=”So now let’s look at how that income distribution breaks down. Not surprisingly, the top 50% make the vast majority of all the income in this country.”
content=””
image=”http://static.businessinsider.com/image/5033e2b3eab8ea8774000000/image.jpg”
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[slide
permalink=”the-top-25-make-about-three-quarters-of-all-the-income-20″
title=”The top 25% make about three-quarters of all the income.”
content=””
image=”http://static.businessinsider.com/image/5033e2d269bedd2634000011/image.jpg”
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[slide
permalink=”the-top-10-make-about-half-of-all-the-income-21″
title=”The top 10% make about half of all the income.”
content=””
image=”http://static.businessinsider.com/image/5033e2f1eab8ea5674000003/image.jpg”
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[slide
permalink=”the-top-5-make-about-a-quarter-22″
title=”The top 5% make about a quarter.”
content=””
image=”http://static.businessinsider.com/image/5033e312eab8ea717100001c/image.jpg”
caption=””
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[slide
permalink=”the-top-1-make-a-nice-chunk-which-has-grown-significantly-over-the-years-23″
title=”The top 1% make a nice chunk (which has grown significantly over the years).”
content=””
image=”http://static.businessinsider.com/image/5033e333ecad044b15000019/image.jpg”
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[slide
permalink=”and-the-top-01-do-startlingly-well-24″
title=”And the top 0.1% do startlingly well.”
content=””
image=”http://static.businessinsider.com/image/5033e36169bedd843600000b/image.jpg”
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[slide
permalink=”on-a-percent-of-the-whole-basis-heres-how-all-that-income-breaks-down-looks-pretty-even-until-you-remember-that-the-top-5-bands-are-all-in-the-top-half-the-blue-band-is-the-bottom-half-25″
title=”On a per cent-of-the-whole basis, here’s how all that income breaks down. Looks pretty even–until you remember that the top 5 bands are all in the top half. The blue band is the bottom half.”
content=””
image=”http://static.businessinsider.com/image/5033e1ac69bedde32e00000a/image.jpg”
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[slide
permalink=”okay-before-we-go-back-to-taxes-lets-spend-a-bit-of-time-understanding-the-key-economic-trend-of-our-age-why-the-top-income-earners-are-making-more-and-more-of-the-total-national-income-and-at-the-same-time-paying-more-and-more-of-the-income-taxes-heres-a-chart-of-us-income-growth-for-the-last-90-odd-years-through-2008-over-the-whole-period-the-income-growth-was-relatively-widely-distributed-pie-chart-26″
title=”OK, before we go back to taxes, let’s spend a bit of time understanding the key economic trend of our age–why the top income earners are making more and more of the total national income (and, at the same time, paying more and more of the income taxes). Here’s a chart of US income growth for the last 90-odd years through 2008. Over the whole period, the income growth was relatively widely distributed (pie chart).”
content=””
image=”http://static.businessinsider.com/image/4e9a0e92ecad042051000006/image.jpg”
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[slide
permalink=”over-the-first-60-years-of-that-period-in-fact-the-income-growth-was-very-widely-distributed-the-bottom-90-of-earners-actually-collectively-captured-most-of-it-blue-in-the-pie-chart-27″
title=”Over the first ~60 years of that period, in fact, the income growth was very widely distributed. The bottom 90% of earners actually collectively captured most of it (blue in the pie chart).”
content=””
image=”http://static.businessinsider.com/image/4e9a0f7e6bb3f75043000015/image.jpg”
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[slide
permalink=”but-in-the-past-30-years-all-that-changed-in-the-past-30-years-the-bottom-90-blue-captured-only-a-tiny-percentage-of-the-income-gains-the-top-10-and-especially-the-top-1-pink-captured-most-of-it-28″
title=”But in the past 30 years, all that changed. In the past 30 years, the bottom 90% (blue) captured only a tiny percentage of the income gains. The top 10%–and especially the top 1% (pink)–captured most of it.”
content=””
image=”http://static.businessinsider.com/image/4e9a101aeab8ea062100001e/image.jpg”
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[slide
permalink=”and-then-look-at-what-happened-in-the-decade-through-2008-the-top-10-captured-all-of-the-income-gains-in-the-country-and-the-incomes-of-the-bottom-90-shrank-29″
title=”And then look at what happened in the decade through 2008: The top 10% captured ALL of the income gains in the country–and the incomes of the bottom 90% SHRANK.”
content=””
image=”http://static.businessinsider.com/image/4e9a0fb86bb3f7754b000000/image.jpg”
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[slide
permalink=”why-have-we-developed-such-income-inequality-in-part-because-the-average-hourly-earnings-in-this-country-havent-grown-in-50-years-30″
title=”Why have we developed such income inequality? In part because the “average hourly earnings” in this country haven’t grown in 50 years.”
content=””
image=”http://static.businessinsider.com/image/4bbcb53d7f8b9a2e1beb0c00/image.jpg”
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[slide
permalink=”and-the-explosion-of-senior-executive-pay-meanwhile-has-sent-the-earnings-of-the-richest-americans-going-through-the-roof-31″
title=”And the explosion of senior executive pay, meanwhile, has sent the earnings of the richest Americans going through the roof.”
content=””
image=”http://static.businessinsider.com/image/4bbcaeb47f8b9a812b5a0100/image.jpg”
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[slide
permalink=”so-thats-why-the-top-10-is-capturing-all-of-the-income-gains-now-lets-look-at-those-income-and-tax-percentiles-together-the-bottom-50-of-income-earners-in-this-country-those-who-make-less-than-30000-a-year-make-about-13-of-the-total-income-and-pay-2-of-the-income-taxes-32″
title=”So that’s why the top 10% is capturing all of the income gains. Now let’s look at those income and tax percentiles together. The bottom 50% of income earners in this country–those who make less than $30,000 a year–make about 13% of the total income and pay 2% of the income taxes.”
content=””
image=”http://static.businessinsider.com/image/5033e50f69bedd923c000013/image.jpg”
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[slide
permalink=”the-top-50-meanwhile-make-and-pay-pretty-much-everything-33″
title=”The top 50%, meanwhile, make and pay pretty much everything.”
content=””
image=”http://static.businessinsider.com/image/5033e646eab8ea0977000012/image.jpg”
caption=””
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[slide
permalink=”the-top-25-of-income-earners-who-make-more-than-60000-per-year-make-two-thirds-of-the-national-income-and-pay-87-of-the-income-tax-34″
title=”The top 25% of income-earners, who make more than ~$60,000 per year, make two-thirds of the national income and pay 87% of the income tax.”
content=””
image=”http://static.businessinsider.com/image/5033e53d69bedd2c3c000006/image.jpg”
caption=””
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]
[slide
permalink=”the-top-10-of-earners-who-bring-home-a-minimum-of-110000-per-year-make-43-of-the-income-and-pay-70-of-the-income-tax-35″
title=”The top 10% of earners, who bring home a minimum of ~$110,000 per year, make 43% of the income and pay 70% of the income tax.”
content=””
image=”http://static.businessinsider.com/image/5033e561ecad04861900000c/image.jpg”
caption=””
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]
[slide
permalink=”the-top-5-of-earners-who-make-a-minimum-of-150000-a-year-make-a-third-of-the-income-and-pay-almost-60-of-the-income-tax-36″
title=”The top 5% of earners, who make a minimum of $150,000 a year, make a third of the income and pay almost 60% of the income tax.”
content=””
image=”http://static.businessinsider.com/image/5033e5efeab8eaa479000000/image.jpg”
caption=””
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[slide
permalink=”and-the-top-1-who-all-make-more-than-350000-a-year-make-about-17-of-the-income-and-pay-37-of-the-tax-37″
title=”And the top 1%, who all make more than $350,000 a year, make about ~17% of the income and pay 37% of the tax.”
content=””
image=”http://static.businessinsider.com/image/5033e60decad04c11d000000/image.jpg”
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[slide
permalink=”and-how-about-the-top-01-they-make-8-of-the-income-and-pay-17-of-the-tax-38″
title=”And how about the top 0.1%? They make 8% of the income and pay 17% of the tax.”
content=””
image=”http://static.businessinsider.com/image/5033e6286bb3f79f5800001b/image.jpg”
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[slide
permalink=”the-01-by-the-way-make-more-than-15-million-apiece-39″
title=”The 0.1%, by the way, make more than $1.5 million apiece.”
content=””
image=”http://static.businessinsider.com/image/5033e6b969bedd2c3c000017/image.jpg”
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[slide
permalink=”the-bottom-50-collectively-make-only-slightly-more-than-the-top-01-hows-that-for-income-inequality-but-the-top-01-do-pay-more-taxes-40″
title=”The bottom 50% collectively make only slightly more than the top 0.1% (how’s that for income inequality!?). But the top 0.1% do pay more taxes…”
content=””
image=”http://static.businessinsider.com/image/5033e50f69bedd923c000013/image.jpg”
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[slide
permalink=”lastly-how-about-income-tax-rates-you-guessed-it-theyre-higher-though-not-high-on-the-1-and-01-41″
title=”Lastly, how about income tax rates? You guessed it: They’re higher (though not high) on the 1% and 0.1%.”
content=””
image=”http://static.businessinsider.com/image/5033e6796bb3f79a5800001f/image.jpg”
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[slide
permalink=”so-whats-the-answer-how-can-we-fix-our-country-who-should-pay-more-the-answer-is-actually-more-on-the-income-side-than-the-tax-side-to-fix-this-country-we-have-to-increase-the-incomes-of-the-lower-middle-class-and-middle-class-not-by-taking-away-income-from-the-top-half-but-by-getting-more-income-to-the-bottom-half-42″
title=”So, what’s the answer? How can we fix our country? Who should pay more? The answer is actually more on the income side than the tax side. To fix this country, we have to increase the incomes of the lower-middle class and middle class–not by taking away income from the top half, but by getting more income to the bottom half.”
content=””
image=”http://static.businessinsider.com/image/5033e2b3eab8ea8774000000/image.jpg”
caption=””
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[slide
permalink=”how-can-we-get-more-income-to-the-90-one-way-would-be-to-persuade-corporations-to-invest-more-of-their-profits-in-their-employees-by-hiring-more-and-paying-more-right-now-corporate-profits-are-at-an-all-time-high-as-a-percent-of-the-economy-43″
title=”How can we get more income to “the 90%”? One way would be to persuade corporations to invest more of their profits in their employees — by hiring more and paying more. Right now, corporate profits are at an all time high as a per cent of the economy.”
content=””
image=”http://static.businessinsider.com/image/4fe2807feab8eaca7f00000c/image.jpg”
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[slide
permalink=”wages-meanwhile-are-at-an-all-time-low-so-its-no-wonder-we-have-such-an-inequality-problem-44″
title=”Wages, meanwhile, are at an all-time low. So it’s no wonder we have such an inequality problem.”
content=””
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[slide
permalink=”so-thats-your-crash-course-in-income-taxes-now-lets-talk-about-the-economy-45″
title=”So that’s your crash course in income taxes. Now let’s talk about the economy…”
content=”OK, Folks, Let’s Put Aside Politics And Look At Some Economic Facts >
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