Wealth Gap: How Far Apart Are The Bottom 50 Percent And The Top 1 Percent?

WASHINGTON -- Listening to Republicans on the campaign trail or the House floor, one might think the quickest way to eliminate the deficit is to make Americans who earn the least pay more in taxes. "Part of the problem is today only 53 percent pay any federal income tax at all; 47 percent pay nothing,” Rep. Michele Bachmann (R-Minn.) told a crowd in South Carolina, repeating a conservative meme. "We need to broaden the base so that everybody pays something, even if it’s a dollar."

Beyond Bachmann, the idea has been spread by Republicans from Texas Gov. Rick Perry, Florida Sen. Marco Rubio and former Utah Gov. Jon Huntsman to members of the House and Senate leadership. It was brought up again in Wednesday's GOP presidential debate by other candidates.

"Daily Show" host Jon Stewart recently zinged the GOP for its relentless focus on the poor, noting that even if the government took absolutely everything the bottom 50 percent owned, it would still raise only about $700 billion (never mind the starvation that would result).

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But that's wealth. What about income? What if the government taxed those who Republicans say are getting off scot-free at the rate of 50 percent of all they earned and disallowed deductions? How much would that raise?

Not that much.

Using data from the Internal Revenue Service compiled by the Tax Foundation, a HuffPost analysis found that if the bottom 50 percent of Americans (those earning less than $33,048 a year) had their gross income taxed at a flat rate of 50 percent, the government would net around $537 billion. However, taxing the top 1 percent (earning $380,354 or more) at the same 50 percent rate would rake in about $843 billion.

The gross income figures in this analysis include capital gains -- more likely to be a source of income for the top 1 percent -- which are currently taxed at lower rates than income. Of course, no one is seriously pushing the idea of taxing the richest 1.4 million Americans at a 50 percent rate.

This analysis also uses a 50 percent flat tax, rather than the current progressive tax rates. The flat tax is another idea championed by conservatives and Republican presidential candidates. Even at the lower flat tax rate that conservatives propose -- 17 to 20 percent usually -- the money raised from the bottom 50 percent of Americans would still pale in comparison with how much the top 1 percent would pay in total. Yet such a rate would represent a significant tax increase on the bottom 50 percent, in some instances doubling their burden, while cutting taxes on the wealthy almost in half.

The suggestion to return to the Clinton-era top marginal rates on the richest Americans alone would send an addition $72 billion pouring into federal coffers annually, according to Citizens for Tax Justice.

To see the wealth gap from another perspective, consider that the net worth of the bottom 60 percent of all U.S. households, roughly 100 million households, is lower than that of the Forbes 400 richest Americans -- an analysis confirmed by various economists for PolitiFact.

Further, the amount raised over 10 years by increasing tax rates on the top 2 percent of Americans to the rates that prevailed in the Clinton era would be greater than half the net worth of the bottom 60 percent of U.S. households. Ending the Bush tax cuts for those households earning more than $250,000 would add almost $830 billion to U.S. coffers over 10 years, after factoring in the cost to finance the debt.

The Tax Policy Center said the Bush tax cuts, which lowered the top tax bracket from 39 to 35 percent, have cost the United States more than $2.3 trillion since they were enacted. The Center on Budget and Policy Priorities has shown that the Bush tax cuts, if extended, would become the largest contributor to the deficit within a decade.

And, of course, the argument that half of Americans aren't paying federal income tax ignores a host of other levies, including federal payroll taxes, as well as various state taxes the poor cannot escape -- such as income, sales, property and gas taxes -- which are actually paid at a similar rate across all income levels.

Comments

[quillerm]

07:09 PM on 11/07/2011

The media is reporting that rich retirees are stealing from our youth, the new Wealth Gap between young and old. Retirees have 47 times more wealth than young adults. They own houses, cars and IRAs. Never mind that most of these retirees had kids who cost them thousands in food, shelter, clothing, medical bills, auto insurance, etc. Now the OWS brats want more cash from Mom and Dad, to hell with the banks. Force parents to sell their homes and cash in retirement accounts. Give the money to the kids who need new IPODs and other toys. Mom and Dad can spend their retirement living under a bridge somewhere.

[fortressfountain]

08:11 PM on 09/21/2011

What happened to the unemployment section? I bet it skyrockets tommorrow.
How come the top executives make 900 percent more than everyone else and this is the highest gap in the world in the USA?
With all of the big bucks they are making why is the country in such shambles?

[Viable Way]

01:08 AM on 10/17/2011

I liked the statistic I read today here at HP that said corporate profits last year were $1.68 TRILLION dollars. Remarkable how the DEFICIT was $1.3 TRILLION!

Oh yeah, and if you divide that $1.3 trillion by 350 million people, you get a DEBT of $37,000 for every man woman and child in the USA (including illegals?) and that was just 2011...it was about the same in 09 and 10

[erinsf]

02:45 PM on 09/19/2011

I might add that...if the lobbyists want to pay the lower 99% of us to oppose Obamas administration...this is something that might be considered.....these congressional legislators are Hypocrites

[erinsf]

02:43 PM on 09/19/2011

Warren Buffet is NOT a socialist. He is a capitalist. And yet, he appears to understand that closing some tax loopholes is good for EVERYONE. The corporate jet class are not evil. They just need to be reminded that when their neighbors and their communities are healthy than they are more productive and EVERYONE will benefit.

[Blackjackii]

04:35 PM on 09/12/2011

When the wealth gap has grown so sizable that the top 400 households control more wealth than over 100 million of those at the bottom....

...you don't just have a small tear in the fabric of your stable society. You instead are facing a fissure so deep and ever-widening, it threatens to undermine the very foundation of your world.

Remarkably, current US policies are not only doing little to reverse this trend, but are instead exponentially exacerbating it.

[Jenny Olson]

08:54 AM on 09/12/2011

Although I am not wealthy I still feel like I'm getting the better end of the bargain. When the meager lose everything we improvise but we survive, may have to live with the parents again for a spell but we still climb up from rock bottom! When the wealthy lose everything, they commit suicide cause Lawd knows you can't deal without luxury automobiles, designer clothes, and only a three bedroom house!

[tman418]

07:10 PM on 09/20/2011

Usually wealthy people have a lot of savings which would blunt losing their job, unless they spent out of control and lived a lifestyle above their means.

[Jenny Olson]

09:26 PM on 09/21/2011

I think you would be very surprised about how many "cash poor" wealthy people live in the U.S., they really don't save so much as invest and when the money is all tied up it is often as good as gone.

[stumpedI]

01:21 AM on 09/12/2011

every worker deserves a living wage, not one person in the usa should be allowed to accumulate so much wealth they threaten the very democracy.. If they want THAT much wealth let them go move to a banana republic somewhere else .. instead of turning the usa into one. The problem is not rich americans, the problem is wealth corrupting and destroying our democracy. With this in mind there should be a cap on how much wealth someone can accumulate, and the inheritance tax should take all but 1 million per survivor. The inheritance tax's value comes not as a revenue generator.. but as a former protection against dangerous vast accumulations of wealth.. like france had before it's revolution.. I think now america is so far gone.. it would take another french revolution to save our republic.

[Jenny Olson]

08:35 AM on 09/12/2011

I'm all for taxing the wealthy but what you are proposing is down right communism. You can't just take a bulk of ones inheritance or put a cap on how much wealth one could accumulate. 1 Million dollars isn't even that much in all honesty. Fair taxes should be paid with concessions going towards people that cannot pay as much opposed to those that have the ability to pay a fair share. Government spending does need to be curbed in many areas but most of all in waste, pay for elected officials, and discretionary spending. The American people should not be picking up the tab for lunches, dinners, or transportation of politicians. It's the age of the Internet and flying form point A to point B is quite pointless and a huge waste.

[Viable Way]

01:11 AM on 10/17/2011

how about if corporations had to pay an inheritance tax? Either pay every 100 years or DIE!

[Mista-J]

09:25 PM on 09/11/2011

I like how people say the rich won't take higher taxes. Where are they gonna go? China? i doubt they'll enjoy living in a third world country. how about Canada, or Europe. LoL the taxes are 10x higher there. I guess they're stuck!

[Ana4]

02:59 PM on 09/12/2011

And who among the present Congress is going to support higher taxes for the rich? They are all wealthy themselves, or become so on entering office. This is the problem; they take lobbyist money and favor those over the electorate. Vigorous re-regulation is needed. Corporate money goes offshore; the individuals can be anywhere they want with impunity.

[RMForbes]

04:28 PM on 09/11/2011

The rich shouldn't be punished for their success but they also should not get special tax incentives and exemptions that the rest of us do not get. We need to reform our federal tax code and remove all of these special tax breaks that only benefit the already very wealthy. We could remove all tax deductions, credits, shelters and loopholes reducing the current 70,000+ page tax code to a pamphlet that everyone would be able to understand by simply increasing the minimum taxable income from the ridiculously low $400/yr to the federal poverty level and beginning the marginal tax rates from there.

[Viable Way]

01:19 AM on 10/17/2011

How about this...figure out how much it costs a family to live, exempt that amount and tax the rest. There could even be adjustments to the Cost of Living for city dwellers or locations with high expenses for local services, like snowplows in the north?

For corporate people...deny all deductions for jets, artwork, fancy offices, food, entertainment and skyboxes and bribes. Even deny charitable contributions, since so much of that money is really just recycled into the cronies of the wealthy. Deny salary and bonus deductions above realistic amounts. Look carefully at offshore income too!

I know it sounds earth-shattering to deny charitable deductions, but even our CHARITIES are beholden to corporations...who is left to speak out? Our politicians cannot withstand bribes, nor can our charities. Of course, if corporations didn't gobble up $1.68 trillion in profit when the deficit is $1.3 trillion...maybe we wouldn't need so much charity!

[jimtodd]

02:56 PM on 09/10/2011

None of this is new information, although it has been universally ignored by the media. The winners over the past 40 years have been the already rich and the military, with their contractors. The losers are workers, families, public institutions, and our victims around the world.

[g9]

05:27 PM on 09/10/2011

I fan you jimtodd.....Do not forget the the other really big winners (which include som of the above mentioned) member corporations & the members of congress that belong to .....alec.org ...(google alecexposed.org)

[cdchicago]

02:32 PM on 09/10/2011

Hese is a lot of macroeconomic theory being thrown around in here. However, little attention seems to focus on the fact that the design of America is such that we need each other. Some rich, some in the middle, hopefully fewer and fewer at te bottom. So how about we stop the tactical plans to augment one class at the expense of the other and look for the original plans and read a bit more history. Otherwise all that lies ahead is the fall of America and "the French solution". The French solution was not pretty, decapitated the rich, made the poor crazy and only temporarily benefitted a famous dictator.

[sal ear]

09:37 PM on 09/10/2011

RE: French Revolution - at a certain, people become angry. France is now a Socialist Democracy.

[seanny53]

05:29 PM on 09/11/2011

I fear a revolution in this country might not be progressive but rather fascist. But revolution is coming, though maybe not in my lifetime. Like Napoleon, fascism won't last forever if it wins. Germany, Italy, Spain were all once fascist and are now social democracies. I hope for the best, and I hope it comes sooner than later.

[Ana4]

03:01 PM on 09/12/2011

Fa scism is what we have now that corps own government.

[tman418]

07:12 PM on 09/20/2011

So what we need is a fascist dictatorship, later to be overthrown to become a socialist democracy?

If ALL of that can happen in the next 10 years and not later, I'll go along with it. As long as the fascist dictatorship doesn't commit genocide.

[athenatwo]

02:05 PM on 09/10/2011

Wealth Care.

[dztmseh70]

01:31 PM on 09/10/2011

You gotta love the logic of people who think like Michelle Bachman and her fellow conservatives. A while back Orin Hatch of Utah was railing against the poor, demanding that everyone should stand up and contribute regardless of how poor they are and claiming how coddled and dependent on the government they have become by getting things like unemployment or any help from programs designed to be safety nets for those less fortunate. Yet they totally turn a blind eye to the top 2% of the country. I know people who are not rich but who are so dead set against taxation of any kind that they refuse to see how we all are being cheated by the wealthy minority in this country. There is a huge unequality in this way of thinking. The poor pay the same gas tax and other various taxes at the same rate that the wealthy do. However, the far right would like to take all their income however meager it might be and at the same time resent them for any extra help they may be entitled to. Why do you think the right wing conservatives have such a "love affair" with the rich and powerful? Could it be that they always have an eye on the upcoming election and all the money they will need to win?

[g9]

05:29 PM on 09/10/2011

cheney/bush...europe called them "hood robin" steals from the poor & gives to the rich.....If most of europe can see this why are so many blind to it here..

[sal ear]

08:33 PM on 09/10/2011

Europe is a mature Continent, and the European Nations are more evolved/civilized than the US. Europe has experienced extreme granduer and terrible catastrophe. The US is a continual Melting Pot, where people come to to chase the Proverbial Pot of Gold. The US hasn't matured as a Country; we don't seem to care about 'our fellow Americans'.

I'd prefer to be WRONG - I HOPE I am! but I believe the US as a whole is on it's way down....The rich/powerful increasingly prey upon the poor/less powerful. Obama can't seem to turn this around.

Look at Rick Perry! He is insane! Just out of his freakin' mind! He makes G W Bush look like Einstein!

[Ana4]

03:54 PM on 09/11/2011

The 'average' European is smarter, worldly wise than the average Joe here. Look at some of their TV offerings from the 80's-90's; they were scriptwriting (already accepted political insight) common knowledge about the inner workings at the top before we youngsters got the first flashes after c.2000. We've been naive.

[Viable Way]

01:23 AM on 10/17/2011

If you want "LOGIC" go to AIM, Accuracy in Media. They are trying to convince people who are angry at BOA about the $5.00 debit card fee that they should blame OBAMA for regulating debit card transaction costs. They say OF COURSE the banks would have to make up for the "loss."

[dztmseh70]

09:57 PM on 10/17/2011

I guess we all knew the banks would try to find a way to get even. BOA customers should withdraw their money and put it in a local credit union.

[bmattix]

01:29 PM on 09/10/2011

Let's go serfing now, everybody's learning how...come on a safari with me...

[sal ear]

08:34 PM on 09/10/2011

Are you advocating a return to the Feudal System?

[Ana4]

03:56 PM on 09/11/2011

Don't go there, even in jest.

[rog1112]

01:23 PM on 09/10/2011

Blame 24/7/365 FOX propaganda for not all 80%+ voting their financial interests.

[Jenny Olson]

08:42 AM on 09/12/2011

I don't blame Fox, I blame the inherent lack of common sense that is so prevalent in our country. The facts are out there but instead of looking them up and searching for knowledge, too many fools turn on their T.V. or radio and take what they hear for fact.

[rog1112]

02:12 PM on 09/12/2011

And the reason advertising makes billions. However, FCC regulates 'our' airwaves-- so why no honest news instead of the propaganda? And/or why not label it as propaganda instead of news! Isn't it a little like labeling rat-poison as vitamins?