NCPA - National Center for Policy Analysis


July 1, 2008

Economic populists on the campaign trail often imply that the richest Americans are now shouldering less of the federal tax burden than they did in recent decades.  However, according to a report by Stephen Moore of the Wall Street Journal, "Lower tax rates have made the tax system more progressive, not less so." 

Moore's report has recently been confirmed by the latest statistics from the Congressional Budget Office (CBO):

  • In 1981, the highest quintile of income earners paid 56.4 percent of federal taxes; in 2005, the top quintile paid 68.7 percent of all federal taxes -- an increase of 12.3 percent.  
  • The bottom quintile is paying even less in taxes than they did in 1981; 0.8 percent of taxes in 2005, compared to 1.8 percent in 1981.
  • The middle classes are also paying less in taxes; the middle quintile has gone from paying 13 percent in 1981 to paying 9.3 percent in 2005.

The CBO report also revealed the relevant tax burdens of each group.  For example:

  • In 2005, the top quintile earned 51.6 percent of all income after taxes but paid 68.7 percent of federal taxes. 
  • The top 10 percent of income earners took home 37.4 percent of after-tax income but paid 43.8 percent of federal taxes. 
  • However, the four lower-earning quintiles earned a significantly higher percentage of after-tax income than it paid in federal taxes.

Source: "More Progressive All the Time," The American, May/June 2008.

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