Happy Tax Day America!
You just relinquished a fifth of your 2010 income (18.8% on average) to Uncle Sam in the form of income and payroll taxes.
Sure, it stings. But you can rest assured that — in this land of progressive taxation — the richest individuals are, dollar for dollar, taking a bigger hit. As the Pulitzer Prize winning tax journalist David Cay Johnston put it to me in a recent interview: “It’s the ancient and most conservative principle in Western civilization, that the greater your income, the greater the burden you should bear of maintaining the society that made it that big income possible.”
Yeah. About that…
Mother Jones has compiled a brilliant series of tax day charts. But this is the one that should really turn your blood into steam:
What this chart reveals is that the tax code is progressive only up to a certain point. If you’re rich enough in this country, the relative burden you bear actually diminishes. What explains the falloff? The richest are reaping most of their income from capital gains (taxed at 15%; thanks to the 2003 Bush tax cuts) not labor (taxed at 35% for the highest earners).
I went back to the data Mother Jones used, from the Tax Policy Center, to produce the chart below, which shows the tax-rate falloff for the überrich in more grotesque detail:
To recap: The richest one-tenth of one percent of Americans — earning roughly $6 million each — pay an effective rate of 18.9% in income and payroll taxes. Just like you.