NCPA - National Center for Policy Analysis

The Rich Will Pay a Disproportionate Share for the War

April 16, 2003

The financial cost of the war in Iraq will be relatively low compared to previous conflicts, say observers.

  • The president has requested $75 billion to cover the cost of the Iraq conflict, which works out to $260 per American -- a little less than annual average spending per person on cigarettes.
  • That's just over 3 percent of the proposed federal budget and well under 1 percent of the economy's total output for the year.
  • By comparison, the Vietnam war cost 12 percent of a year's gross domestic product, World War I cost 24 percent, and World War II, 130 percent.

That does not quite tell us who's paying how much for the war. Washington collects plenty of taxes besides individual income tax (though that's the main one), and the Beltway has compiled figures allocating the burden of those other taxes to families. Include all federal taxes, crunch the numbers, and here's how the picture looks:

  • The average family is being asked to pay $625 for the war.
  • If we assume the cost will come from federal tax receipts one way or another, then average families in the poorest quintile by income would pay not $625, but just $33 each.
  • By contrast, families in the richest 5 percent would pay, on average, $4,700 each, and families in the richest 1 percent would pay $13,000 each.

Though the rich have occasionally received more of the economic pie than they do now, never in the past century have they paid a greater share of total federal taxes. And the poor have never paid a smaller part: With the demise of the terribly regressive excise taxes of the 1920s and 1930s, the poorest quintile's share of federal taxes has been declining for years and stands now at 1 percent.

Source: Geoffrey Colvin, "Soaking the Rich? Better Believe It," Fortune, April 14, 2003.


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