Lather, rinse, repeat

I found this in my Drafts folder. I'm not sure if I copied from somewhere or wrote it myself...

The pattern is

1. Government policy and poor regulation cause (or invents) a crisis.
   
2. The government publicly and violently searches for culprits, aided by the MSM, and names the wrong parties--usually in the private sector.
   
3. The government then rolls out a massive new law and its regulatory children to "fix" the problem as they defined it.
   
4. The new law doesn't solve the real problem, costs a lot, and has massive unintended (but fully predicted) consequences, including setting the stage for the next crisis, which will be bigger and more damaging.
5. Memory of the past crisis fades and everybody reluctantly adjusts to the massive new regulatory overhead.
   
6. A new crisis occurs. The government publicly and violently searches for the culprits, aided by the MSM--looking exclusively in the business community...

and so it goes.

Would you believe? 70% vs 35% tax rate...

For fun, let’s compare the effective rates and a few other values under Carter (1979) and G.W. Bush (2006). Recall that under Carter (1979) the marginal rate went all the way up to 70% paid on income over $215,400 (married filing jointly); under Bush (2006), the highest marginal rate was *only* 35% paid on income over $336,550 (married filing jointly). The CBO puts out a nice paper every year. It starts with data from 1979 and runs up to 2006 (the last year for which I have data, 2005 for the top 0.01%), making this comparison easy.

Would you believe that in 1979, when the highest marginal tax rate was 70%, the effective income tax rate paid by the top 1% was just 21.8% (compare to the marginal rate of 70%). In 2006, after massive tax rate cuts that were accompanied by elimination of a host of deductions, the effective income tax rate for the top 1% had dropped only a few points down to 19% (compared to marginal rate of 35%).

Would you believe that in 1979, when the highest marginal tax rate was 70%, the top 1% paid 15.4% of all federal taxes collected but that in 2006, when the highest marginal rate was a mere 35%, the top 1% paid 27.6% of all federal taxes collected?

Would you believe that the bottom 80% are *all* (statistically, not necessarily as individuals!) paying a smaller share of the both the total federal tax burden and income tax burden in 2006 than they were in 1979? Only the top 20% are paying more?

Would you believe that the bottom 40% went from paying about 4% of income taxes collected in 1979 to paying -3.6% in 2006 (negative share of taxes due to excess refundable tax credits, primarily EITC and child-related credits)?

Believe it!

Share of Total Federal Tax Liabilities
* the lowest quintile (20%) paid 2.1% of all taxes collected in 1979 and 0.8% in 2006
* the second quintile paid 7.2% of all taxes collected in 1979 and 4.1% in 2006
* the middle quintile paid 13.2% of all taxes collected in 1979 and 9.1% in 2006
* the fourth quintile paid 21.0% of all taxes collected in 1979 and 16.5% in 2006
* the highest quintile paid 56.4% of all taxes collected in 1979 and 69.3% in 2006
* top 1 percent paid 15.4% of all taxes collected in 1979 and 27.6% in 2006
* top 0.01% percentile paid 2.7% of all taxes collected in 1979 and 6.5% in 2005

Share of Federal Income Tax Liabilities
* the lowest quintile paid 0.0% of income taxes collected in 1979 and -2.8% in 2006
* the second quintile paid 4.1% of income taxes collected in 1979 and -0.8% in 2006
* the middle quintile paid 10.7% of income taxes collected in 1979 and 4.4% in 2006
* the fourth quintile paid 20.2% of income taxes collected in 1979 and 12.9% in 2006
* the highest quintile paid 64.9% of income taxes collected in 1979 and 86.3% in 2006
* top 1 percent paid 18.3% of income taxes collected in 1979 and 39.1% in 2006
* top 0.01% percentile paid 2.6% of income taxes collected in 1979 and 8.0% in 2005

Share of Pre-Tax Income
* the lowest quintile earned 5.8% in 1979 and 3.9% in 2006
* the second quintile earned 11.1% in 1979 and 8.4% in 2006
* the middle quintile earned 15.8% in 1979 and 13.2% in 2006
* the fourth quintile earned 22.0% in 1979 and 19.5% in 2006
* the highest quintile earned 45.5% in 1979 and 55.7% in 2006
* top 1 percentile earned 9.3% in 1979 and 18.8% in 2006
* top 0.01 percentile earned 1.4% in 1979 and 4.2% in 2005

Total Effective Federal Tax Rate (income+payroll+excise+corporate)
* the lowest quintile rate was 8.0% in 1979 and 4.3% in 2006
* the second quintile rate was 14.3% in 1979 and 10.2% in 2006
* the middle quintile rate was 18.6% in 1979 and 14.2% in 2006
* the fourth quintile rate was 21.2% in 1979 and 17.6% in 2006
* the highest quintile rate was 27.5% in 1979 and 25.8% in 2006
* top 1% percentile rate was 37.0% in 1979 and 31.2% in 2006
* top 0.01% percentile rate was 42.9% in 1979 and 31.5% in 2005

Effective Income Tax Rate
* the lowest quintile rate was 0.0% in 1979 and -6.6% (negative 6.6 percent) in 2006
* the second quintile rate was 4.1% in 1979 and -1.0% (negative 1.0 percent) in 2006
* the middle quintile rate was 7.5% in 1979 and 3.0% in 2006
* the fourth quintile rate was 10.1% in 1979 and 6.0% in 2006
* the highest quintile rate was 15.7% in 1979 and 14.1% in 2006
* top 1% rate was 21.8% in 1979 and 19.0% in 2006
* top 0.01% percentile rate was 21.0% in 1979 and 17.0% in 2005