A new report from the Institute for Policy Studies shows how the rich have shifted the tax burden onto the backs of workers over the past fifty years, and why we need to reverse the trend.
Here are the highlights:
Washington, D.C. – America’s highest-income taxpayers, analysts at the Institute for Policy Studies detail in a new Tax Day report, pay a staggeringly smaller share of their incomes in taxes than America’s rich did back in the 1950s.
“Since 1955,” notes John Cavanagh, director of the Institute for Policy Studies, “we’ve seen a tax shift of truly epic proportions. Now more than ever, the ultra-rich need to contribute their fair share to help our economy get back on track.”
America’s top 400 taxpayers in 1955 paid three times more of their income in taxes, the new Institute for Policy studies report points out, than the top 400 of 2006, the most recent year with IRS data available.
If the most affluent 400 of 2006 had paid as much of their incomes in taxes as the top 400 in 1955, the federal treasury would have collected an additional $35.9 billion more in revenue in 2006 just from these 400 ultra-rich individuals.
The report found that the 139,000 U.S. taxpayers who made over $2 million in 2006 averaged $5.9 million in income. If these individuals had paid taxes at the same rate as their 1955 counterparts, the federal treasury would have collected, in 2006, an additional $202 billion.
The report, “Reversing the Great Tax Shift: Seven Steps to Finance Our Recovery” offers proposals that would raise $450 billion of revenue to support economic recovery. These include:
* Introducing a modest financial transaction tax that will chill speculation and generate $100 billion a year.
* Implementing an estate tax reform that taxes inheritances over $2 million at progressive rates.
* Setting an emergency tax rate on extremely high incomes that would generate over $60 billion a year.
* Eliminating the tax preference on capital gains and dividend income, generating $80 billion.
* Closing overseas tax havens for individuals and corporations, generating $100 billion.
* Scrapping $18 billion in tax breaks that subsidize excessive CEO compensation.
“By seriously taxing the top, as we did in the 1950s, we could raise the revenues we need to better invest in infrastructure, education, and retrofitting our energy system,” says Chuck Collins, an IPS senior scholar and co-author of the new IPS brief. “Appropriately targeted, higher taxes on the top would also serve to dampen the speculative frenzy that has cratered our economy.”