US more reliant on tax revenue from higher earners

The United States relied more on tax revenue from wealthy individuals and families than other industrialized countries during the middle of the last decade, the Tax Foundation said Monday.

Citing data released in 2008 from the Organization for Economic Cooperation and Development, the nonpartisan group said that the ratio of what higher-income households paid in taxes compared to their share of market income was bigger here than in certain other countries. 

The richest 10 percent of American households paid a 45 percent share of the nation’s taxes in the mid-2000s, the OECD found, while having a 33.5 percent share of market income. That 1.35 ratio was higher than countries including Australia (1.29), Canada (1.22), France (1.1) and Poland (0.84).

The Tax Foundation’s release comes after the recent debate between Democrats and Republicans over whether to extend the Bush-era tax cuts for income above $250,000 for households — roughly the top 2 percent. 

Both parties generally favored extending the Bush tax rates for income beneath that threshold. A compromise hashed out between the White House and congressional Republicans eventually extended all of the rates through the end of next year.

The OECD’s 2008 report also said that the average income of the top 10 percent of American households was $93,000, and that income inequality had grown quickly in the U.S. in recent decades.

Progressive members in both chambers of Congress are pushing now to raise taxes on millionaires to help narrow budget deficits — citing, among other things, data that says the top 1 percent owns more wealth in America than the bottom 90 percent.

Sen. Bernie Sanders (I-Vt.) and Rep. Jan Schakowsky (D-Ill.), who are leading that charge, say raising taxes on millionaires is a better way to attack budget deficits than cutting spending on programs like Head Start and Pell grants.

For their part, Republicans continue to stress their belief that the federal government has a spending problem, not a revenue one.