President Obama said last week that “the tax burden on the wealthy is at its lowest level in half a century.” Let’s assume that he based that claim on the 2009 tax year, when most people’s tax rates dropped significantly. If so, when you have negative economic growth for the first time in 60 years (as was the case that year), the good news is that you won’t have to pay as much in taxes.
Sure enough, if you divide all taxpayers into quintiles based on household income (using figures from the Tax Policy Center for 2008 and 2009, and from the Congressional Budget Office from 1980 to 2007) it turns out that, in 2009, the total effective federal tax rate was at a 30 year low for every quintile. Interestingly, however, one group’s rate did not hit a 30-year low in 2009: the top 1 percent of income earners. Maybe Obama forgot the words, “everybody but.”
Meanwhile, the lowest quintile’s total federal tax rate fell off a cliff, going from a previous 30-year low of 4 percent to a new low of minus-1 percent — which is no doubt an all-time low. Think about that: An entire fifth of the population (when taken as a group) was shifted from being taxpayers to being tax recipients — not just in terms of income taxes but in terms of all federal taxes — as a result of the bad economy and the refundable tax credits from Obama’s “stimulus.”
Such policies are hardly conducive to a free, strong, and self-reliant citizenry that’s well suited to check the excesses of government.