Thursday, September 23, 2004

We'll start with "tax burden"

Here's the first of promised links: individual income tax burden. It's rather scary: the top 20% income bracket pays over 60% of the income taxes. (This appears to be 90s data, though note the stability. I don't know how much Bush's tax cuts changed things.) Even a report requested by Democrats (Google cache; CNN Money appears to have removed the story) notes that the tax burden on the top 1% of income earners fell by 2 percentage points to 20+%.

This is a big part of why Bush's tax cuts were "for the rich:" it's rather hard to make tax cuts any other way. If you did, you'd effectively be shifting the tax burden completely onto the rich.

So here's my question: what is a "fair" income tax? Is it one where the tax burden is equal to the percentage of income earned (e.g. if those in the top 1% of income earners earned x%, then they would shoulder x% of the tax burden)? What are the principles behind a fair income tax?

On the other hand, I have to say I'm much more in favor of consumption taxes and user fees. (This includes reasonable excise taxes on, say, gasoline.) There are several different variations on this, including one that reduces the tax burden on "essential" items like food. I'd like to see this idea get its fair shake in upcoming discourse.