What an interesting chart this is

Of course, the graph could simply show that whereas the top 1% of earners garnered 10% of income in 1980 – earning on average ten times as much as us plebs – they now grab 30%, earning 30 times as much as the rest of us.

Arthur
No, looking at the same cohort would not help, even if they were the same people and John Davis was correct, all it would tell you was that they now earn 30% rather than 10% of all income. Are they earning more because they are working harder? Not avoiding as much tax? (both reasons for reducing the tax rate) or because income distribution has skewed in favour of the wealthy because of a reduction in demand for the services of the middle/poor (neutral with regard to the tax rate) – would they be paying more if the tax rate were higher because this represents a massive rise in the benefits of being located in the UK and being rich?

I am with John Davis here, there is a correlation here, but almost certainly not causation.

I really worry that the (truly) liberal world spends a lot of time persuading itself it is right and not talking past, rather than engaging the leftist myths (like the 1% thing) on their own turf. Turnover into and out of that 1% (or 10% or whatever) is a vastly important thing that is never considered. Very few people spend many consecutive years in any one category. Obvious exceptions apply to those who have it sewn up at one end through some form of regulatory capture (like lawyers and civil servants) or at the other end, those with a revealed preference for the dole.

I saw a programme once which compared the current %ages across all earning groups. There’s a similar, but out of date chart here (bbc), taken from this article. I particularly like it because it shows the percentages paid by the top 1% / 10% etc against others, and easier to read than the pie charts in the HMRC document.

A visual of an extremely thin slice (300k earners) mapped to the 24% (older figure) revenue they supply should certainly ram home the risks of losing them and it.

There’s a similar, but out of date chart here (bbc), taken from this article. I particularly like it…

I particularly like it because it shows that the country is run by and for the Middle Classes, who enjoy the major benefits of large government – “free” healthcare and schooling, subsidised arts, etc. – without actually having to pay for it.

rv: yes, that’s the point. lower tax rates provide incentives for more economic activity which can lead to higher tax intake despite lower tax rates. Also, it provides less incentives for tax avoidance

(It’s a mathematical tautology that lower tax rate can only lead to higher total tax if income increases)

“I really worry that the (truly) liberal world spends a lot of time persuading itself it is right and not talking past, rather than engaging the leftist myths”

This can do great damage – it is a constant surprise to many on the left that there is in fact a substantial manufacturing industry in this country.

I remember the shock on the face of Labour MP when I mentioned the numbers of people employed making cars *at a profit* for UK car companies – he seemed to think that the UK industry consisted of Rover and “the foreigners”.

http://www.faz.net/aktuell/wirtschaft/wirtschaftswissen/arme-oberschicht-so-lebt-das-reichste-prozent-der-deutschen-1637673.html

Hmmm….

For the USA only: A review of the statistics published by the IRS tells several stories, of which Tim hits upon one.

First, the top 1% are paying more taxes. Is it attributable to lower rates? Absolutely. Any tax professional will verify that fact. Tax planning (especially for people residing the top 10% or so) is expensive, time-consuming and unpleasant for the taxpayer. Lots of taxpayers will pay a bit more in taxes to avoid it. But when the tax rates become confiscatory, well, there’s a powerful incentive to bite the bullet and engage in serious tax planning.

Note that not much of the top 1% income comes in the form of wages. It comes in the form of dividends and capital gains. The lowering of rates on capital gains has provided a powerful incentive to sell appreciated assets when it is necessary or convenient to do so, rather than to defer due to the potential tax bill.

Second, the top 1% pay more of the total bill due to the fact that (a) fewer tax filers actually pay any income tax at all. EIC has actually created a class of tax filers receiving income transfers through the tax system. At present the percentage of tax filers who pay no income tax exceeds 45%, and that demographic has risen dramatically over the past 30 years.

Remember Romney’s “the 47%” comment? Remember how the Democrats mocked it? Well, go to the IRS stats and you’ll find where he got that number. Lot at what the bottom 50% pays in the way of taxes relative to what the top 1% pays. Now that’s inequality for you.

The top 1% earn about 13% of the income and pay 30% of the income tax. I think that alone is a good enough argument that they already pay more than their fair share. However a new and better angle has emerged (better in that it gets past the envy filter that corrodes most media reporting – after all few people in the media are in that top 1% and they went to Oxford and everything- ). Is it really sensible to have 30% of your income tax dependent of 350k or so people? Especially as a large proportion of those work in financial services which you are simultaneously trying to exterminate. (Those in the media that do earn over 150k are all on self employed contracts naturally). Every one of those that does quit – and here I declare myself a newly arrived HK resident – will require the tax loss to be made up from somewhere, though obviously not lower spending, heaven forfend.