On Monday, White House press secretary Sarah Sanders used an anecdote to claim the tax system disproportionately affects wealthier earners.
As Sanders put it, “Suppose that every day 10 people, for our purposes we’ll say reporters, go out for beer and the bill for all ten comes to $100. If these 10 reporters paid their tab every night the way we pay our taxes, it would go something like this. The first four, the poorest, would pay nothing. The fifth would pay $1, the sixth would pay $3, the seventh would pay $7, the eighth would pay $12, the ninth would pay $18, the 10th, the richest, would pay $59.”
Sanders is not the first to make such claims.
As Paul Bedard reported last week, the White House Office of Management and Budget claims that the top 20 percent of U.S. earners now account for 95 percent of all federal tax revenue. As OMB Director Mike Mulvaney put it,
“If you break the income tax universe into what we call quintiles, so equal sized 20 percent columns, the first two columns, the first quintile and the lower quintile, don’t pay any taxes at all. In fact they net positive. We pay them when they file a tax return. That middle quintile, which you might describe, some people do, as middle class, pays an effective rate in the low single digits. And all of the taxes are paid by folks in the top two quintiles, and that last quintile pays almost fully, 95 percent I think, of the taxes.”
If Sanders and Mulvaney are even close to being correct, it would mean that the U.S. has one of, if not the most, progressive tax systems on Earth.
I think it likely that the White House is correct here. As the St. Louis Federal Reserve Bank noted in January, in 2014 (the latest year for which data is available), those earning over $200,000 a year accounted for a 56 percent share of all federal tax revenue.
So considering that the wealthy have been growing richer in recent years, why would we doubt that the 56 percent-share figure hasn’t also risen?
If nothing else, the political import of these figures deserves our close scrutiny. After all, while liberals like Bernie Sanders claim that wealthy Americans are getting too-good-a-deal from government, the statistics would seem to prove the opposite. Indeed, without the vast revenue that the tax code extracts from wealthy Americans, the government programs that Sanders so adores would already be bankrupt!
Perhaps the Left should become the cheerleaders of the rich!?
