The CBO just released its report on Historical Effective Federal Tax Rates for years up to 2005 (latest available data). It shows several interesting things:
- The top quintile of Americans is getting richer much faster than the bottom (Paul Krugman). In terms of calculus, the first derivative of income growth increases with income. You must go to sheet 2C to see this.
- The top quintile is paying the majority of the income tax (Greg Mankiw, Wall Street Journal).
- The regressivity of Social Insurance payments has increased since 1979. Bottom quintile taxpayers have seen a 53% increase; top quintile taxpayers have only had an 11% increase (my analysis).
So in other words, the narratives of both John Edwards – who says workers are paying most of the taxes – and Mitt Romney – who says this is the greatest economy ever – are wrong.