Inspired by the CBO report previously linked, I've been looking over more data on tax burden distribution.
I graphed some data from this CBO file (Click to enlarge):
The trends are striking. Taxes for the bottom four quintiles are trending downward and have for 30 years. The trend is for lower taxation for the bottom 80%. While the tax cuts for 4th quintile appear to be the most generous, you have to keep in mind proportionality. If you get a 5% tax reduction from a 10% rate, that is HUGE-- half of your taxes disappear. But that same 5% reduction on a 30% nominal rate is much smaller. Thus, the nearly-flat line for the bottom quintile obscures what is a considerable tax reduction from 2.1% of all tax receipts in 1979 to a mere 0.3% of all tax revenues in 2009. This represents a cut of 85.7% in total tax revenues contributed by the bottom 20% over the last 30 years.
Another trend that is worth mentioning: the "Bush Tax Cuts for the Rich" actually raised the taxes paid by the top quintile. In 2003 (after the second round of Bush Tax Cuts was fully in effect), the top quintile paid 65% of all federal tax receipts. In the ensuing years, the effective tax contribution of that top quntile never went below that 65%; it went to 66.2% in 2004, 67.6% in 2005, 68.1% in 2006, 67.8% in 2007, 69.2% in 2008, and 67.9% in 2009. In every year following the "Bush Tax cuts for the rich" the top quintile of taxpayers paid a larger share of the federal tax revenue than it did before those tax cuts.
What about that t0p 20% that is paying (as of 2009) ~68% of all tax revenues? Here is how that 68% breaks out:
At 22.3%, the top 1% pay more than the bottom three quintiles (the lowest 60%) pay combined. This is rather startling by itself. Add to this that the top 1% consists of only 1.1 million households and the bottom 60% of 70 million households and seems even more incredibly skewed.
The Top 1% in 2009 took in 13.4% of all pre-tax income, yet paid 22.3% of all tax revenue. The top 5% brought in 25.9% of the income, and paid 39.6% of all taxes. The top 10% took in 36% of all income, and paid 51.8% of all taxes.
On the bottom end, the lowest quintile took in 5.1% of the national income and paid 0.3% of the taxes. The bottom two quintiles (below $69,800 for a family of four in 2009) brought in 14.9% of all income and paid 4.1% of all taxes.
Even "middle class" households pay very little in overall taxation. Consider that 40th percentile household of four. The pre-tax income is almost $70k-- more than enough to live in relative comfort in th vast majority of locales in the country. Yet this household is the top end of a quintile that pays an average TOTAL tax rate of just 6.8%. Since payroll taxes are more than that (7.6%), the only way this can occur is if, on average, the income tax rate is negative, and therefore partially offsets the payroll tax. That's the only way for an effective tax rate to be lower than the payroll tax rate.
The CBO data indicates this is true. The 2nd quintile (which our example is the very top of) has an average income tax rate of -2.6%. Got that? You can make $70K in a household of four and have a negative income tax rate.