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Tax Day Report: Documents Burden Shift from Ultra-Rich to the Rest of Us Identifies $450 Billion in Hikes to Fund Recovery
WASHINGTON - April 9 - 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 did America’s rich back in the 1950s.
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 Fairly,” 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.”
John Cavanagh is the Director of the Institute for Policy Studies, and the author, with Robin Broad, of Development Redefined: How the Market Met its Match <http://www.ips-dc.org/books#
Chuck Collins is an Institute for Policy Studies senior scholar and director of its Program on Inequality and the Common Good. He is co-author, with Bill Gates Sr., of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes (Beacon Press, 2003). email@example.com; 617-308-4433 (m)
Sam Pizzigati, an IPS associate fellow, edits Too Much, on online weekly on excess and inequality. He is author of Greed and Good: Understanding and Overcoming the Inequality That Limits Our Lives (Apex Press, 2005). firstname.lastname@example.org ; 301-933-2710 (o)
Cavanagh, Collins, and Pizzigati are all co-authors of the newly published Mandate for Change: Policies and Leadership for 2009 and Beyondwww.mandate4change.org (Lexington Books, 2009).