One of These Graphs Will Make You Angry About the Rich and Taxes

I have two graphs to show you. And I promise you that at least one of them is going to make you angry. The thing is, I don't know which one will make you upset, because they tell very different stories, which have been used by different sides to make very different points.*

The first graph is more likely to raise your ire if you sympathize with the Occupy Wall Street movement. It shows what each group of Americans make, from the poorest 20 percent to the richest 20 percent. But as you can see, the richest 20 percent make so much more than the other 80 percent -- and the top one percent make so much more than the rest of the top quintile -- that it requires yet another breakdown.** The upshot is that the average 99th percenter makes more in a year than somebody in the bottom quintile would make in 150 years.

If you consider yourself a conservative, you're more likely to shrug off the first graph and take offense at the second. It compares the share of federal income taxes (which are a substantial but not exclusive part of federal government revenue) between the bottom 40 percent and the top 1 percent. The top one percent pays four times more than the bottom 40 percent.

Both of these graphs are true. Their truths are intertwined. The rich have much more money. They pay much more in federal income taxes. This sounds perfectly obvious. But I'm struck by how many times I hear one of those two facts without hearing the other.

A key third part of this story is the fact that, for all the talk about the Buffett Rule, the U.S. has a progressive tax code. (Okay, so I lied. I have more graphs.) Here's a look at effective tax rates, a measure that includes federal income taxes, payroll taxes, and excise taxes. On a person-by-person basis, taxes are complicated. Nearly half the country does not owe federal income taxes (nor do 7,000 millionaires) and some investors pay a lower effective tax rate because capital gains and dividend taxes are treated differently than regular income. But the basic point is that its a progressive system.

When you add it all up, we have a country with steep divisions between rich and poor and a tax code that for all of its problems is progressive (although it has been more progressive in recent year). Here are two more graphs to take you home: the first shows share of income by quintile and the second shows share of federal income taxes by quintile. What you'll see is that income inequality is behind tax burden inequality.

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* I'm trying to keep personal opinions out of this post, which is supposed to be a graphical representation of what I find to be really useful Tax Policy Center data. But if you're more interested in my opinion...

**The average income of the top 1 percent is not the same as the income of somebody at percentile 99.0 exactly, because it includes megamillionaires and billionaires who all belong to the top 99.9 percent of U.S. earners.