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Posted at 12:41 PM ET, 11/21/2011

Debunking the conservative argument about the rich and taxes, in three easy charts

It’s one of the most frequently trotted out arguments against raising taxes on the rich: Over time, the share of the tax burden borne by the rich has grown, so it’s not fair to increase it more.

Paul Ryan made that case in his very serious report on inequality the other day. John Boehner and Rand Paul both repeated variations of this case over the weekend.

This is the way conservatives prefer to frame the argument. But this approach ignores two metrics that are arguably more important to the debate: How much the overall income of the wealthy has increased in relation to the increase in the share of the tax burden they’ve borne; and how much the share of their own income they are paying in taxes has shrunk.

Here are three charts, drawn up by the Post digital team, and based on IRS data, which illustrate this very clearly.

It’s true that the share of the tax burden paid by the rich has grown. The first chart shows that the share of the overall tax burden paid by the top one percent has risen some 12 percentage points since 1986:


But here’s the rub: The overall income of the top 1 percent has risen significanly faster than that over the same time period. The second chart shows that the percentage change of the overall average income of the top one percent has risen by 119 percent. That’s more than twice the amount of the change in their income tax, which grew by 54 percent in that time:


And finally, the third chart shows clearly what this means: The share of adjusted gross income paid by the top one percent dropped by 10 percentage points over that time period. The bottom line is that the amount of after tax income has risen at a much faster pace than the amount they pay out of it:


So, look, here’s the disagreement in a nutshell. Conservatives say we should not raise taxes on the rich because wealthy people are already paying a disproportionate share of the tax burden. Liberals respond that the wealthy’s after tax income has exploded at a far greater rate than their rate of taxation has risen. Liberals are proposing only a tiny adjustment in that trend, as part of a broader solution to reduce the deficit that would also involve those of much more modest means making sacrifices.

And take heart: Those modest adjustments would not constitute a serious challenge to inequality of wealth and income in this country, which would remain as lopsided as ever.

By  |  12:41 PM ET, 11/21/2011

 
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