I had a thought last night that, what with tax season coming right on up, it would be fun to do a visualization of income and tax distribution. So I wandered down to the CBO and grabbed this document and turned it into a visualization. Sadly, their latest data is pushing 4 years old, so I’ll probably have to update it sometime soon.
If you’d like to use a low res version of this chart in your own blog, this one has just the shapes and very little text, so it scales better smaller more better readability. The information here is kind of blunt… I’m sure there are several variables I haven’t accounted for. But this is a pretty accurate portrayal of the data at the CBO (unless I did a calculation wrong).
I wanted to do this because I get really sick of people who say things like “The top 1% of income earners pay 27% of the taxes.” Unless you believe that someone who makes $15K a year should pay $20K in taxes, that is a very silly statement. If the top 1% of income earners make 27% of all the money, it would be perfectly reasonable for them to pay 27% of all the taxes.
That’s why I wanted to make this chart. I want to be able to communicate in a single image how much the top (and bottom) earners make as well as how much they pay in taxes. The thing I think this chart brings out is that we have a progressive taxation system that does not treat all money equally. (Some may bristle that I just called our taxation system progressive, but I’m going to stick by that description. It may not be as progressive as some wish it was, but it is progressive.)
If you earn between the 80th and 90th percentile, you’re the closest we come purely equitable income taxation. That group makes 14% of all the money and pays 14% of all the income taxes.
A tax system that treated all money equally (like a flat tax) would look something like this:
In this system, dollar number ten million and one made by a hedge fund manager would be taxed at the same rate that a dollar made by a single mom earning minimum wage at a fast food restaurant. Every new dollar made would be “created equal” under the tax law. Such a system would probably reduce compliance costs as well, although I imagine it wouldn’t be particularly popular. “Let’s tax the poor more so that we can tax the rich less!” doesn’t sound like a winning campaign.
And, just for fun, I created the “pure socialism” model of this chart as well.
Of course, pure socialism is pretty silly, so this would never happen. Reason one is that, if everyone made the same amount of money, we wouldn’t have quintiles or “the top 1%”. It would just be a blob.
And it wouldn’t make any distinction between people who work hard and people who are lazy. As Penn Jillette has stated (I’m paraphrasing), “laziness is a perfectly valid life choice”. Life gives us all sorts of things to trade off with. Some people trade money (or the potential of earning money) for hanging around the apartment playing video games. Nothing wrong with that. But I don’t mean to get off on a “socialism is really silly” tangent.
I just hope that these charts are helpful and fun. Feel free to steal (with proper attribution).