Data on taxes

I pulled some data from the IRS today out of curiosity about some of the legends I'm hearing throughout the political discourse as well as an article I was reading the other day about the value of progressive income taxes. These graphs I threw together were pretty interesting to me. First, this shows the distribution of Adjusted Gross Income. Note that this is not income, it is stated income after deductions, exemptions, etc. Where do you stand? The guys on the right average $1.7M. Not bad.



This next chart shows the effective tax rate of these folks. So unless the guys at the right are incredibly good at adjusting their income, we really do follow a progressive tax scale and the poor lady down the block is not really paying more in taxes than the greedy Wall Street lawyer.



Finally, this last one shows how the top end of the population pays the taxes. The 1% of guys on the right pay 40% of the total tax bill while 50% of the population accounts for 10% of the tax. It's pretty clear why the Bush tax cut was a "tax cut for the rich" since there's no tax to cut for the poor, right? The way you cut taxes on the poor is through other taxes that disproportionately affect them (e.g., sales tax).



Probably worth noting that some of the Bush tax cuts weren't so much a tax cut as a tax correction, to try to adjust for taxes that currently create the wrong incentives in the economy such as double taxation on dividends. Does that cut taxes disproportionately for the rich? Probably, but it also creates the incentive for companies to pay out dividends again instead of using more and more debt. If you think dividends for those fixed income baby boomers are a good thing and corporate bankruptcy is a bad thing, you might just be a Bush tax cut fan after all!