Tuesday, August 11, 2009
Who'll get hit hardest by tax increases?
Barack Obama and the Democrat-controlled Congress are spending money like drunken sailors, piling up deficits once considered inconceivable. Actually, that's not fair. I've known drunken sailors to exercise much more restraint and prudence. Clearly, Obama's campaign pledge to not raise taxes on those earning less than $250,000 a year is going to have to go the way of pretty much every one of his other campaign pledges...right under the bus. Don't believe me? Maybe you'll believe former Democratic White House staffer Lawrence Haas.
I made this graph to illustrate the distribution of who pays what taxes. On the far right, you've got the top 1% of earners in the country - those making $389,000 a year or more - paying close to 40% of all income taxes collected. Working our way to the left, the top 5% - those making over $154,000 a year are paying close to 70%. A little further left are the top 25% - making $109,000 a year or more - at around 86%. Next we have the top 50% - those making $32,000 or more - at around 97%. That leaves fully 50% of the population making less than $32,000 a year shouldering 3% of the load.
So, guess who's going to get hit hardest? Sure, everyone will see an increase, but there simply aren't enough of the top earners in the country to make up the difference. A big chunk of the additional burden - just by virtue of shear numbers - will have to come from that bottom 50%, those who can least afford to pay more.