Entries in Bush Tax Cuts (2)
5. The Bush tax legacy means we currently tax wealth less than work: middle-income paychecks are taxed at 25% compared to stock dividends and capital gains for the wealthiest, which are taxed at a top rate of only 15%.
6. While most small businesses dream of making a killing, only 3 out of every 100 small business owners pay taxes at the highest rate.
7. A Wall Street transactions tax of only 0.50% on short-term speculation could raise up to $170 billion annually.
9. Upper income households save an average of $5,500 thanks to the mortgage interest tax deduction.
10. Only four OECD nations collect less revenue as a percentage of GDP than the United States: Chile, Korea, Mexico, and Turkey.
— By Tamara Draut, Vice President of Policy & Programs at Demos
Any solution to the nation’s fiscal challenges will require tax increases, and tax increases on high earners in particular. But as the debate over the wealthy and taxes revs up yet again, fueled by President Obama’s renewed call to repeal the Bush tax cuts, it is time for some fresh thinking about how much the rich—and especially the super rich—should be paying.
Under current law, the top income tax rate applies to all earners making above $373,650—treating the merely affluent no different than the super rich. This doesn’t make sense. A couple making $400,000 a year in a major metro area is certainly very well-off, but they are not rich in the way of a CEO who pulls down $10 million a year. The tax code should reflect this reality by including new brackets for the richest of the rich.
The need to make distinctions between the Haves and the Have Mores has grown as those at the tippy-top of the income ladder have pulled far away from even the upper rungs. Between 1979 and 2008, according to data compiled by the scholars Thomas Piketty and Emmanuel Saez, the upper rungs (households in the top 10 percent) saw their average incomes nearly double from $135,429 to $233,711 (in 2008 dollars)—nice gains, and far greater than middle class households.
But folks in the top 10 percent may feel downright poor when they look upward, given that the top 1 percent really raked it in, seeing their incomes nearly triple during those decades, going from an average of $336,311 to $905,570.
And the inequality within the top 1 percent is even bigger. Between 1979 and 2008, average income in the top 0.1 percent of households quadrupled, soaring to $3.98 million a year. That’s a lot of money, to be sure. But maybe not when compared to the real winners of the new Gilded Age: households in the top .01 percent saw their average incomes grow from $2.57 million to $17.1 million—a whopping sevenfold increase.