Taxes over Time

As the deficit hawks begin to make noise, this is worth remembering:

Taxing the Rich, Over Time, by David Leonhardt, Economix: My column this week notes that tax rates on the affluent have fallen more in recent decades than tax rates on other groups. Here are the details...

This chart, which goes through 2004, tells the story in graphical terms. ...

If we had good numbers on the distribution of state and local taxes, the picture would be even more pronounced. These taxes tend to be less progressive than federal taxes, in part because sales taxes are a larger part of state and local revenue. ...

With all this being said, it is also true — as you often hear — that the wealthy are paying more in taxes than they used to. ... So what’s the full story? In brief, tax rates for the wealthy have fallen more than for other income groups. Tax rates for the very wealthy have fallen more than they have for the merely wealthy. Incomes at the top have also increased much more quickly than incomes have for other groups.

Add it all up, and you can see why the wealthy are paying a greater share of federal taxes even though they are paying less tax on each dollar they earn. They’re simply making many more dollars than they used to.