Tuesday, May 18, 2004
The Citizens for Tax Justice has released a 3-page report, Do Fat Cats Pay Lower Tax Rates than Workers?. Here is the Introduction:
The federal tax code has become so skewed in favor of investors over workers that personal taxes on earnings are now two-and-a-half times greater than personal taxes on investment income. That is the central finding of a new analysis by the Institute on Taxation and Economic Policy (ITEP), released today by Citizens for Tax Justice (CTJ).
For a copy of the 11-page ITEP report, see here.
2 responses to “Tax Policy Group Compares Tax Rates of Workers v. “Fat Cats””
The federal “tax” on earnings as set forth in this report includes both the Federal Income tax and Social Security / Medicare taxes. Including Social Security / Medicare in the analysis inflates the “federal tax” on “earnings” by about 12%.
Federal income taxes on earnings (excluding social security and medicare) average about 10.7% according to this report; federal income taxes on investments average about 9.6%. No a big difference, in my mind. Given the reduced tax rates on dividends and capital gains, I’m surprised the disparity is not greater.
I seriously question the usefulness of
this report. To suggest that
“workers” pay disproportionate taxes by
focusing only on the effective rates, and
ingoring the bases upon which those
effective rates are applied, is simply
ingnorant or intelectually dishonest.
The fact is that “fat cats” (who
apparently aren’t “workers”) pay an
overwhelming majority of income taxes in
this country, far in excess of their
proportion of total income. This
disparity and disproportionality has been
growing, not shrinking, for many years.
An incredibly high percentage of people
pay virtually NO income tax. The payroll
taxes, though somewhat regressive, do
not make up for this disproportionality.