Realclearpolitics.com has an interesting article about tax cuts and the impact on the share of taxes paid by the wealthy called Tax Cuts for the Wealthy: Appearances v. Reality. According to their research, the top 1% of Americans paid the following proportions of 100% of income taxes:
1980 = 19.3% (Tax rate 70%)
[Reagan cut the tax rate to 35% in a “massive give-away” to the wealthy.]
1986 = 25.7% (Tax rate 35%
[Reagan cut the tax rate again to 28%.]
1992 = 27.5%
A common critique of this analysis is that it does not include payroll taxes. Researchers examined this and found minimal impact. The percentage of payroll taxes paid by the following percentages of taxpayers was:
Top 1% = 23.3%
Top 10% = 52.2%
Top 20% = 68.2%
The researchers found that similar changes have happened in other countries. Here is the percentage of taxes by
England’s top 1%:
1979 = 11% (Tax rate 83%)
[Thatcher cut rates to 60%]
1987 = 14%
[Thatcher cut rates to 40%]
2004 = 21%
They site gives evidence from other countries, but I particularly liked the pointed closing paragraph.
"At some point, those on the left must decide what really matters to them — the appearance of soaking the rich by imposing high statutory tax rates that may cause actual tax payments by the wealthy to fall, or lower rates that may bring in more revenue that can pay for government programs to aid the poor? Sadly, the left nearly always votes for appearances over reality, favoring high rates that bring in little revenue even when lower rates would bring in more."
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