Next down the pike from the White House, as you know, is “tax reform.” That means either a Flat Tax or a much flatter tax. And whichever names you dress it up with or rationales used to justify it, it’s a fancy way to describe putting more of the tax burden on middle income earners.
But an important article that ran last week in the Christian Science Monitor (and which TPM Reader AM brought to my attention yesterday) explains that our tax code is already pretty darn flat.
According to the article (which relies on statistics compiled by the Congressional Budget Office and the irreplaceable Bob McIntyre at Citizens for Tax Justice), the top 1% of earners currently pay an effective rate of 32.8%, when federal, state and local taxes are added together. The bottom 99%, meanwhile, pays 29.4%. And even more striking figure is the effective rate paid by the middle 20% on the income scale. That’s, pretty much by definition, middle income earners — whose average income is $34,500. They pay an effective rate of 27%.
So the top 1% (average income=$978,000) pays 32.8% and the middle 20% (average income=$34,500) pays 27%. I’d say that’s pretty flat already.
Now, an important part of the equation is state and local taxes, which tend to be fairly regressive. But even when you look at only federal taxes, the tilt isn’t that great.
Needless to say, the effect of all President Bush’s tax cuts has been to make the tax code more flat — and, of course, intentionally so. That’s the agenda.
