I’m not one of those people who thinks that the best way to tackle income inequality is to go after the rich people. I really don’t care how much money they make. The more important issue is how we raise up those who are struggling. Things like raising the minimum wage, access to higher education and health insurance as well as benefits like paid family leave and affordable child care are where we need to focus.
Where rich people come in is that we need them to pay their fair share of taxes in order to make some of those possibilities a reality without bankrupting the country. That’s why I find it odd that, with all our focus on the problem of income inequality, so little attention has been paid to what Josh Barro reported recently.
Data released by the I.R.S. on Wednesday shows that tax rates on the income of America’s 400 wealthiest taxpayers rose sharply to 22.9 percent in 2013, erasing a majority of the last two decades’ decline in their effective tax rate.
As described in an article in The New York Times on Wednesday, tax rates on America’s 400 wealthiest taxpayers fell sharply from the late 1990s through 2012, when their average effective income tax rate fell to 16.7 percent from 26.4 percent…
The spike in the wealthiest people’s tax rates was mostly achieved…through initiatives from President Obama. Two laws that he championed became effective in 2013, raising tax rates on high earners and limiting the value of tax deductions they are entitled to take.
Those two laws were the American Taxpayer Relief Act of 2012 that eliminated the Bush tax cuts for people making over $500,000 and the Affordable Care Act, which increased taxes on both earned income and capital gains. Both of these laws were hard-fought victories for the Obama administration. But often, because of the intensity of those battles and the many other issues that were addressed, we lost sight of the tax implications.
We’ve still got a ways to go to get back to the effective tax rate of 26.4% in the 1990’s. But let’s acknowledge that we’ve made some significant headway on that.
In other words, “Thanks, Obama.”