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Taxes Flatten but Deep Pockets Still Bulge
Key Excerpts from Article on Website of Los Angeles Times
Posted: November 11th, 2006
http://www.latimes.com/news/nationworld/nation/la-na-taxday1...
Millionaires and middle-class Americans now pay taxes at almost the same rates. Lower tax rates have contributed to huge increases in the wealth of the wealthy, but so far most people haven't seen significant economic improvement. [The] latest three-year examination of family finances found that average family income fell by 2% between 2001 and 2004. In the previous three-year period, average family income grew by 17%. Thanks to more credit card debt and borrowing against their homes, the 25% of Americans at the bottom of the wealth scale had negative net worth in 2004. The first federal tax code specified a maximum rate of 7%, but after the U.S. entered the war in 1917, Congress boosted the top rate to 77%. The 1986 tax overhaul brought the top rate to 28% in 1988, its lowest level since 1931. President Bush has achieved something close to the flat-rate structure by cutting tax rates on earned income and particularly on dividends and investment profits. Although the top tax rate is 35%, nobody pays that percentage. People with income between $500,000 and $1 million owed the same share of their income... -- 22% -- as did taxpayers reporting at least $1 million in income. Taxpayers in the $100,000 to $200,000 range paid nearly the same rate, 20.6%. Those in the $50,000 to $75,000 range paid 17.4%; taxpayers in the $40,000 to $50,000 range paid 15.8%. During the previous seven economic expansions before the current one, employee compensation rose four times faster than corporate profits. In the current expansion, profits have risen three times faster than compensation.
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