The Arizona Republic ran a side bar article about recently released FY 2003 state Department of Revenue statistics showing how progressive our tax system is. The highest-earning 8.4% of Arizonans (adjusted gross income of $100,000 or more) paid 53% of individual tax revenue. The highest 0.12% (those earning $1 million or more per year) paid 13% of the total revenue. The tone of the article was, boy, is that progressive!
But is it really? Those earning $100,000 represent 8.4% of the population, but as a statistician once said, "When Bill Gates walks into a bar, the average income in the room goes up by several hundred million dollars."
When we consider not income, but how much of a state's (or nation's) wealth is controlled by high income families and individuals, our tax system doesn't look so progressive. Statistics on net worth are much harder to determine than income, but are more representative of financial situation. What's the net worth of a family earning the median Arizona income, about $30,000 per year? Probably not much. They may own some furniture and appliances, but chances are, they owe as much on their car as it's worth. They probably rent their house or apartment. Such a family may have a little savings, but by the time they pay for rent, utilities, groceries and gas, there probably isn't much left. They probably don't have health insurance. These are half of the families in Arizona, and they own very little of the state's wealth.
By contrast, the 8.4% of families earning over $100,000 all own a house, probably with significant equity; many own a vacation home. They have at least two cars that will outlast any loan payments. The family probably has significant savings, health insurance and several expensive entertainment gadgets, boats and recreational vehicles. To economists, they have disposable income - income well above that necessary for mere survival. These families pay 53% of income taxes, but they probably own and/or control well over that proportion of the state's net worth. So do they pay their fair of income taxes? Not easy to say. What do you think?
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Comments: 6
We need tax reform.
It would help if we could also make the conservative rich understand that they didn't get where they are, financially, solely by their hard work. They were given a huge head start simply by being part of a society that supports them...a judiciary that keeps the business playing field somewhat level, an educated work force that can produce (and PURCHASE) the goods and services that make the economy work for them.
For some reason, they don't get it. I wrote a little piece about this for Gather over a year ago.
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Thanks for the link. You made excellent points. It's exactly analogous to the Marshall Plan that rebuilt Europe after WWII. Sure it cost a lot of money - and that still gripes my parents half a century later - but without it Europeans would have been mired in poverty for decades, and because they couldn't afford our goods, so would we have been. AND, we'd have had WWIII by now.