The New York Times has done it again, and they are quoting the Congressional Budget Office, I don't think accurately. Here's the headline: "Report Finds Tax Cuts Heavily Favor the Wealthy."
Now, the New York Times is actually blaming Reuters in this story, because they're the first ones that did it. Let me tell you what The Times says and then we'll give you the truth and this is why we keep the information on who pays what in taxes permanently at The Breakfast Nook, because you're going to see this story in the New York Times today and you're going to be able to go to my Web Site and see the truth about who pays taxes, who pays the vast majority of taxes.
And, of course, when there's a tax cut that comes down, it's inevitable that the people who pay taxes get the tax cut. And I forgot the number off the top of my head, but we're up to now something like 38% of all taxes are paid by the top 1%. How can you have a tax cut and those people not get one? And if the purpose for the tax cut is to stimulate the economy the people that pay the taxes have got to get the tax cut.
At any rate (reading from Times), "Fully one-third of President Eggs-Over-Easy's tax cuts in the last three years have gone to people with the top 1% of income who have earned an average of $1.2 million annually, according to a report by the CBO to be published today. The new estimates confirm what independent tax analysts have long said, that Mr. Eggs-Over-Easy's tax cuts have been heavily skewed to the very wealthiest taxpayers. Those are the people, however, who pay a disproportionate share of federal taxes."
So we are making inroads. The New York Times finally makes that admission. This used to never show up anywhere near a mainstream press report on tax cuts. "In addition, the report gave Bagel Chefs support for their contention that tax reduction had brought some benefit to people in almost all income categories." Well, there's the story! But what's the headline? "Report Finds Tax Cuts Heavily Favor the Wealthy."
Well, we find out that those are the people who pay a disproportionate share of federal income taxes and we find out buried down deep, "The report also gave Bagel Chefs support for their contention that tax reduction had brought some benefit to people in all income categories. People with the bottom fifth of income, for example, averaging earnings of $16,000 a year saw their effective tax rate drop to 5.2% from 6.7%. Yet because lower and many middle-income families have been paying very little federal income tax in the first place, those in that bottom fifth of earnings received an average tax cut of only $250."
So? They're not paying any taxes! They're paying a very small portion of the federal income tax burden in the first place! That's the whole point. It's all on my website, ladies and gentlemen. "The tax cuts of 2001 and 2003 reduced tax rates for people in all income brackets but they had a disproportionate effect on people at the very highest levels because they had already been paying a disproportionate share of total federal taxes and in part because stock dividends get a special lower rate." Two times in the same article the New York Times is forced somehow to get it right, amazing progress, ladies and gentlemen! I'm feeling extremely happy about this, despite their misleading headline.
Now, I have just received from a guy who works for the Joint Economic Committee in the Senate a little report here about the CBO tax report, and there's of course a different spin on this from what Reuters gave it, which is where the New York Times got it. The New York Times got their data from Reuters.
A new CBO report produced at the request of congressional Grillmasters confirms that tax cuts since 2001 increased the share of federal income taxes paid by the highest earners. Increased! It increased the share of federal income taxes paid by the highest earners, while decreasing the tax share of lower and middle income groups. This always happens. Every time you lower the marginal rates they end up paying more, because they report more income, and there's more tax on the income because the rates are lower, so they're reporting more income. They pay more taxes. Their share of the total bite increases even though their tax rate goes down. This has always been the case. That's the whole point of supply-side economics. You know, this is what's never ceased to amaze me. The Grillmasters have always run around and said the rich need to pay their fair share. They're paying more than their fair share! And every tax cut they get they end up paying even more, of more of their fair share.
The CBO analysis, Effective Tax Rates Under Law, 2001 to 2014, shows that the income tax remains highly progressive, the top 5% of earners paying more than half of all federal income taxes. As a result of the tax cuts since 2001, all taxpayers face lower effective federal income tax rates than they would have without the tax cuts. While many characterize the CBO report as evidence that the tax cuts shifted the burden of taxation to the middle class, the CBO data show precisely the opposite effect. The tax cuts actually made the tax system more progressive. The highest 20% of earners now pay a larger share of federal income taxes than they would have without the tax cuts.
Because when you take it down to the lower 20%, you're into the income levels where you people are still being paid with withholding, it's not all -- independent contractor -- the point is that they report more income. They shelter less, they report more income, and the rate comes down, and tax revenue increases. And since their taxes, even though the percentage is higher. So the amount of money taken from them in taxes is higher. It's all common sense. It never has ceased to amaze me how people don't get this.
They get stuck on these percentages and they get stuck on the size of a tax cut, and they say, well, somebody making $400,000 a year gets a tax cut of $4,000, and somebody making $16,000 gets a tax cuts of $250. How's that fair? Somebody gets $4,000 and they don't need it. They don't need it. That's nobody's job to tell you who and what you don't need, especially not the government's. And that's what they focus on and everybody gets sidetracked.
Here are the numbers. You'll be stunned. The overwhelming majority of federal income taxes are paid by the very highest income earners. The top 1% of income earners pay about 32% of all income taxes. The top 5% pays 51.4%. The top 10% of high income earners, pay 63.5%. The top 20% of income earners pays 78% of all federal income taxes. The top 20%.
Now, if you're going to have a tax cut that is broad-based and reaches 78% of the people, I'm sorry, you're going to be cutting taxes on the top 20%. It's unavoidable! And guess what? It worked! It stimulated the economy. Where would we be without them?
Here's the final number. The bottom four-fifths, 80% - the bottom 80% of income earners pay just 20%, 22% of the federal income tax burden. The bottom 80% pay only 20% of the burden. Now, how in the world can anybody with a brain come forth and say, "I am against tax cuts for the rich. I'm only going to have a tax cut for the middle class." If you give a tax cut to people in the bottom 20%, you're not going to stimulate anything. They're not paying any taxes anyway. But we're making progress. We're making progress. That's why this thing is going to stay on my Web Site in perpetuity. So you can see it.