Those who argue that America has been drifting into socialism, redistributionism, and confiscatory tax policies aimed at “successful” people in recent decades should be compelled somehow to read the following graphs from a piece by Binyamin Applebaum and Robert Gebeloff in the New York Times:
[M]ost Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.
Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.
Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010.
The uneven decline is a result of two trends. Congress cut federal taxation at every income level over the last 30 years. State and local taxes, meanwhile, increased for most Americans. Those taxes generally take a larger share of income from those who make less, so the increases offset more and more of the federal savings at lower levels of income.
Within the category of federal taxes, moreover, the share of revenues collected from relatively progressive income levies has steadily declined as compared to those collected from highly regressive payroll taxes.
The average American in 2010 paid 30 percent more of income in payroll taxes than in 1980, even while paying 27 percent less in federal income taxes. As a result, revenue from the payroll tax almost equaled income tax revenue before a temporary payroll tax cut took effect in 2011. The cut is scheduled to expire at the end of this year.
The rise of the payroll tax reflects the general movement away from requiring upper-income households to pay a larger share of income in taxes. All workers pay the same Social Security tax on wages below a threshold, which stood at $106,800 in 2010. The Medicare tax imposes a single rate on all wages, without a threshold.
Now some conservatives, no doubt, would dispute these numbers and the conclusions based on them simply because they were generated by the New York Times. And many Tea Folk would scoff at the 1980 baseline for comparison since it reflects levels of taxation in an earlier era of socialist serfdom, which was interrupted by the Golden Era of Ronald Reagan. But the total percentage of income paid in taxes by people earning over $350k in 1982 (after the big round of Reagan tax cuts was enacted, but before the two tax increases he signed) was barely lower than the percentage today, and the percentage that segment paid in federal income taxes actually dropped significantly (from 25% in 1982 to 21% in 2010).
Any way you slice it, taxation of the wealthy cannot be construed as moving in a more progressive–much less confiscatory–direction in recent decades, so the very idea that “socialism” has reached a Galtian breaking point has zero empirical support, if that matters.