Today's Wall Street Journal editorial on the tax code, which concludes that "[t]he U.S. tax system is already 'progressive' enough," uses a common trick: talking about the rising tax share paid by upper income Americans without once mentioning the rising pre-tax income share that they receive. Here's how the Journal frames it:
The authors found that over the course of 20 years the richest 0.1% of all taxpayers saw their overall tax share double -- to 11.05%, from 5.06%. The top 20% of all earners also saw their tax share increase sharply to more than two-thirds of all taxes paid. Meanwhile, the bottom 20% of earners paid only a tiny share in 1979 but saw even that share cut in half 20 years later -- including payroll taxes.
When you receive a disproportionate increase in pre-tax income, you're going to pay more taxes -- this isn't rocket science. (There are other changes that affect relative tax burdens, of course, but to not even mention the massive gains made by the rich over the last two decades is intellectually dishonest at best.) The paper (PDF) that the Journal cites in the editorial makes this clear:
The share of income accounted for by the top 1 percent of the income distribution has climbed steadily from a low of 9.58 percent (3.28 for the top 0.1 percent) for 1979 to a high of 21.55 (10.49 for the top 0.1 percent) for 2000... This pattern of an increasing share of total income is mirrored in the 1-to-5 percent class but to a considerably lesser degree. For this group, the income share increased from 12.60 percent to 15.14 percent in this period. The 5-to-10 percent class’s share of income held fairly steady over this period, going from 10.89 percent for 1979 to 11.28 percent for 2002. The shares of the lower percentile-size classes, from the 10-to-20 percent classes to the four lowest quintiles, show declines in shares of total income over the 24-year period.
Thus, it's not surprising that shares of income taxes shifted accordingly:
The share of income taxes accounted for by the top 1 percent also climbed steadily during this period, from 19.75 percent (7.38 for the top 0.1 percent) for 1979, then declined to a low of 17.42 percent (6.28 for the top 0.1 percent) for 1981, before rising to 36.30 percent (18.70 for the top 0.1 percent) for 2000. The corresponding percentages for 2000 for the 1-percent and 0.1-percent groups are 37.68 percent and 19.44 percent, respectively, accounting for the 2000 tax rebate, which is discussed below. The 1-to-5 percent size class exhibited relatively modest change in its share of taxes, increasing from 17.53 percent to 20.29 percent (20.52 including the rebate for the child tax credit) in the period. The 5-to10 percent class, and all lower income-size classes, had declining shares of total tax.
But you won't find any of this in the Journal - just their cherry-picked statistics.
Update 4/26: Glenn Reynolds links. See also Kevin Drum, who posted similar thoughts on the editorial. But most importantly, see the first comment below, which alleges that I'm a soak-the-rich leftist. How he reached that conclusion based on this post is beyond me -- do only leftists demand honesty in editorials on tax policy? As I've said before, I'm a DLC moderate, but this is not about my politics. Whether you care about growing inequality or not, the rising share of income going to upper income earners is a major factor in the distribution of the tax burden. Welcome to reality.
Update 4/27: Sadly, some people are having a really hard time understanding this, so here's a simple model to fix ideas. There are ten people in society. Three of them -- the "rich" -- make $100/year and pay a tax rate of 30%. Seven of them -- the "poor" -- make $40/year and pay a tax rate of 15%. Thus, the rich pay $90/year in taxes while the poor pay $42/year, which means that the rich pay 68% of the taxes measured as a share of the total tax burden.
Now, fast forward a couple of decades. Let's assume that over that period, the rich have done really well, increasing their incomes to $150/year, while the poor are doing only marginally better with incomes of $50/year. We see that the rich pay $135/year in taxes while the poor pay $52.50. Even though the tax structure did not change, the share of total taxes paid by the rich increased to 72%.
The trick the Journal uses is to ignore the changing distribution of pre-tax income and say, "The tax system has become more progressive because the rich are paying more of the taxes." But this happened in our model even though the tax code stayed exactly the same and the poor's income improved marginally. Now, in real life, the tax code obviously changed in various ways, but the fact remains that the rich now command a larger share of pre-tax national income than they did in the past. As a result, it's not surprising that they pay more of the taxes -- and it's not surprising that the Journal went to such lengths to conceal this fact from its readers.
Update 4/27: For more, see this Spinsanity post on how the progressivity of the tax system is spun (an issue I discuss below in comments).