In 1984, after the Reagan tax cut had been fully phased in, the bottom quintile (20 percent) of income earners paid an average federal tax rate (individual, payroll, corporate and excise) of 10.2 percent.
The top quintile of earners paid 24.5 percent and the top 1 percent paid 28.2 percent.
In 2001, after the first Bush tax cut had taken effect, those in the bottom quintile paid average federal income taxes of 5.4 percent, about half of what they did 20 years ago.
Those in the top five percent saw a slight decline in their federal tax rate (28.6 percent, down from 29.7 percent).
The top 1 percent, however, saw their overall federal tax burden increase slightly, from 33 to 33.2 percent.
Despite the accusation that it was the very wealthiest who benefited the most from the 2001 tax cut, their federal tax burden stayed level at best and increased at worst. Progressivity in the tax system rose and the wealthy now pay about six times more than the poor.”
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Maybe that’s because of the following:
“The Wealth Distribution”
“In the United States, wealth is highly concentrated in a relatively few hands. As of 2001, the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%, which means that just 20% of the people owned a remarkable 84%, leaving only 16% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth, the top 1% of households had an even greater share: 39.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2004).”
Check out the following chart:
Table 1: Distribution of net worth and financial wealth in the United States, 1983-2001
Total Net Worth
Top 1 percent Next 19 percent Bottom 80 percent
1983 33.8% 47.5% 18.7%
1989 37.4% 46.2% 16.4%
1992 37.2% 46.6% 16.3%
1995 38.5% 45.4% 16.1%
1998 38.1% 45.3% 16.6%
2001 33.4% 51.0% 15.5%
The wealthiest people have seen their incomes rise, while the poor and middle classes have seen their incomes fall. One would naturally assume their respective tax burdens would shift as a result of the wealth transfer from poor/middle-class to rich.
Also, this chart only goes through 2001, the decline in the stock market is likely the reason for drop in 2001. Will try to find additional info through more recent years, as I think the disparity is even greater now.
