Missouri’s legislature has approved nearly $2 billion in tax incentives for Boeing after a House vote today, and the plan awaits Governor Nixon’s (D) signature. We’ve written on this issue extensively, following it from...
The Tax Policy Blog
Being as the Virginia gubernatorial election is today, and we at the Tax Foundation value keeping the citizenry informed, I thought I’d re-post a few of our findings from examining the tax plans of each of the gubernatorial candidates. From our report in July:
Terry McAuliffe (D)
- Give localities the option to reduce or eliminate the Business Professional Occupation Licensing (BPOL) tax, the Machinery and Tool tax, and the Merchants’ Capital tax
- Create task force to identify new revenue sources for localities with aim of maintaining local revenue
Ken Cuccinelli (R)
- Eliminate or reduce the BPOL, the Machine and Tool Tax, and the Merchants’ Capital Tax, while maintaining local revenue
- Reduce top individual income tax rate from 5.75 percent to 5 percent over 4 years
- Reduce corporate income tax from 6 to 4 percent
- Ensure government does not grow faster than inflation plus population growth
Robert Sarvis (L)
- Eliminate the BPOL, Machinery and Tool Tax, Merchants Capital Tax, and Car Tax
- Consider eliminating the individual income tax
- Consider reforming property taxes to land-value or two-rate tax
- Eliminate credits and deductions on remaining taxes
- Repeal Governor McDonnell’s transportation plan from 2013 session and move instead toward electronic tolling and congestion fees to fund transportation infrastructure
The good news here is that each of the candidates has identified Virginia’s local business tax code as an element that is ripe for reform. These taxes on business capital, particularly the BPOL, aren’t sexy dinner table conversation, but they are outdated parts of the code that need to be reevaluated. I encourage you to read the whole report to understand all the other facets of Virginia’s code that the gubernatorial field is looking at.
More on Virginia.
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While there may be more than 160 tax preferences in the code, most are small in cost and targeted to discrete missions such as the incentives for adopting children or purchasing hybrid cars. To be sure, lawmakers should wipe the slate clean of any inefficient and obsolete provisions, but the big savings are in just a handful of provisions that touch a wide swath of the American public.
The biggest provision by far in the code is the exclusion of taxes on employer-provided health insurance, with a budgetary cost of $212 billion annually. There are a couple of separate provisions that exclude taxes on pensions and 401(k)s that we have combined here for a “cost” of $176 billion. The mortgage interest deduction is the other substantial preference in the code. The dozen preferences listed here have a total budgetary cost of $828 billion—some 75 percent of the cost of all individual tax preferences.
For more charts like the one below, see the second edition of our chart book, Putting a Face on America's Tax Returns.
Corporate income taxes are one of the smallest sources of state government tax revenue, as indicated by data from the U.S. Census Bureau. On average, only 5.4 percent of state tax revenues came from corporate income taxes in 2011 (the most recent data available). [Please note that this map discusses state tax revenues only, not state and local tax revenues together, as is outlined in our Facts and Figures booklet.]
Note that six states do not have a corporate income tax (Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming), but three of them have a gross receipts tax (Ohio, Texas, and Washington). The Census defines “corporate net income taxes” as
Taxes on net income of corporations and unincorporated businesses (when taxed separately from individual income). Includes distinctively imposed net income taxes on special kinds of corporations (e.g., financial institutions).
Because of this, some of the states lacking a corporate income tax may not have a corporate share that is exactly equal to zero.
The top five states with the largest portion of tax revenues coming from corporate income taxes are New Hampshire (24.9 percent), Alaska (13.0 percent), Delaware (10.5 percent), Illinois (9.9 percent), and Tennessee (9.5 percent). Most of these states lack one of the major taxes and have high corporate income tax rates when compared to other states. For example, New Hampshire’s rate of 8.5 percent is 9th highest in the nation. Alaska has a progressive rate-structure with ten brackets and a top rate of 9.4 percent (5th highest).
There are a few reasons why the corporate income tax share is so low on average:
- The number of businesses organized as traditional C-corporations has decreased over time. Businesses can choose one of many forms when structuring themselves, and the number choosing to structure as a traditional corporation is shrinking. As my colleague Kyle Pomerleau pointed out in a recent report on pass-through business entities, "between 1980 and 2010, the total number of pass-through businesses [firms that file business taxes through the individual income tax] nearly tripled, from roughly 10.9 million to 30.3 million." Further, between 1980 and 2008, the number of C-corporations decreased from 2.2 million to 1.6 million. The result? There aren’t as many corporations left on which to levy the corporate income tax, thus shrinking the base.
- States hand out generous corporate tax incentive packages to entice businesses to move to (or remain in) their states. Business tax incentives are popular among state lawmakers. These include things such as jobs credits and investment credits. These lower the tax liability for certain businesses and industries that are engaging in activities that lawmakers deem desirable at the time. In addition to the fact that they are distortionary and non-neutral, incentives such as these carve away at the tax base, reducing tax revenue.
- States further reduce corporate tax bills by fiddling with income apportionment formulas, reducing the in-state taxable income of corporations within their borders. Income apportionment "formulas are used by states to determine what percentage of a corporation's profits are taxed. Generally, three categories are used: property, payroll, and sales." But an increasing number of states have started using sales-only apportionment or have even weighted sales more heavily than other factors. Changing apportionment formulas is a way to reduce the amount of taxable income for certain types of companies within a state without changing tax rates or tax bases, two things that can be politically difficult to do. According to Professor David Brunori (in State Tax Policy: A Political Perspective),
Using a double-weighted or single-sales factor usually lowers tax burdens for
corporations that have substantial operations within a state (as measured by
payroll and property) but sell most of their goods and services out of state.
Indeed, scholars have found that moving to a single-sales factor apportionment
formula decreases corporate income tax revenue by as much as 10 percent
All of these practices have carved away at the state corporate income tax base, making it a small source of state tax revenue when compared to other types of state taxes.
Tomorrow, Colorado voters will decide on Amendment 66, which would move Colorado from one of the eight states with a single-rate individual income tax to one that has a graduated rate structure. Currently, the state’s income tax rate is 4.63 percent on all income levels. Amendment 66 would increase the tax rate on income less than $75,000 to 5.0 percent, while taxing income above $75,000 at 5.9 percent.
Coloradans of all incomes would see a rate increase. Those with taxable income below $75,000 would see an 8 percent increase in rate. Coloradoans with more than $75,000 in taxable income would see a 27 percent increase in their top rate.
An 8 percent increase may seem insignificant, but it leaves less money for households to purchase essential goods and services—especially lower-income families. This is best demonstrated by a few examples, which we outlined in our recent report on the amendment:
- Proponents of Amendment 66 argue that a person making $30,000 per year will pay “about $4 per month” more in taxes, or the cost of “an ice cream cone.” At this income level, the additional $4 a month in taxes from Amendment 66 is better characterized as one less meal, not one less leisure good (such as an ice cream cone).
- Similarly, a taxpayer earning $50,000 annually will pay an additional $9 per month, which supporters equate to “a burrito with extra guac [sic].” In truth, this amounts to an additional $108 per year, on average, or roughly the cost of heating a typical Colorado home for one month during the winter.
- According to the IRS, over 37 percent of Coloradans have an adjusted gross income of less than $25,000. A family earning this amount would pay an estimated $31.08 in additional taxes, which is equivalent to the average cost of feeding a one-year-old child a healthy diet for one week.
- Finally, a two-earner, two-child household, with each parent earning $57,000, would see an estimated annual tax increase of $393, or roughly the cost of the employee portion of one month of family health insurance coverage. Similarly, a person earning $40,000 would see an approximate tax increase of $82 per year, or roughly the cost of a worker’s portion of one month of employer-provided health insurance.
Higher individual income taxes would further reduce the take-home pay of low- and middle-income Coloradans, adding a second round of austerity to already cash-strapped households.
More on Colorado here.
According to the U.S. Treasury, there are currently 169 so-called tax expenditures, or preferences, in the tax code. Interestingly, the congressional Joint Committee on Taxation counts more than 200. However many there are, the Treasury estimates the 2014 dollar value of these preferences at about $1.2 trillion. While many people believe that corporations benefit most from these loopholes, they really don’t. About $1.1 trillion, or 91 percent of all the tax preferences, accrues to individuals rather than corporations.
Additionally, just a handful of the 169 plus provisions account for more than half of the budgetary cost of all individual tax preferences. These include the preferences for employer-provided health insurance, pensions and 401(k)s, mortgage interest, and charitable contributions.
For more charts like the one below, see the second edition of our chart book, Putting a Face on America's Tax Returns.
Last year on Election Day, we put up a page tracking the results for a bunch of state and local ballot initiatives on tax policy. Look forward to that next Tuesday, November 5, where voters in 14 states have elections with initiatives. The good people at the National Taxpayers Union have their ballot guide detailing all of them, and here's a selection below.
The table below lists each initiative and we’ll update this post by filling in the table with the results.
|State & Initiative|
|Arizona Tucson Proposition 401 removes a local spending cap.|
|California Corte Madera Measure B increases the sales tax by 0.5 percentage points.|
|California Larkspur Measure C increases the sales tax by 0.5 percentage points.|
|California Mesa Park District Measure I imposes a $49 annual parcel tax for four years.|
|California San Anselmo Measure D increases the sales tax by 0.5 percentage points.|
|California San Rafael Measure E increases the sales tax by 0.25 percentage points.|
|California Scotts Valley Measure U increases the sales tax by 0.5 percentage points.|
|Colorado Proposition AA imposes a 15 percent excise tax and a 10 percent sales tax on marijuana, legalized by ballot initiative last year.|
|Colorado Amendment 66 increases the current state income from 4.63 percent to a graduated rate of 5 percent on income up to $75,000, and 5.9 percent above that. More on Amendment 66 here.|
|Florida Hialeah voters are deciding whether to eliminate pensions for elected officials.|
|Missouri Ralls County is voting on whether to increase the sales tax by 0.5 percentage points.|
|Missouri Taney County is voting on the 911 Services Sales Tax Proposal, that would remove the tax on landline telephones and instead raise the sales tax by 0.25 percentage points.|
|New York Proposal 1 would allow casino gambling, authorizing seven casinos statewide.|
|New York Proposal 3 permits local governments to exceed debt limits for sewer projects.|
|Ohio Cincinnati Issue 4 switches new city employees to a defined-contribution tax plan.|
|Ohio Plain City is voting on whether to create a 0.25 percent local income tax.|
|Ohio Rocky River Issue 58 would increase the local income tax from 1.5 percent to 2 percent.|
|Ohio Sheffield Lake Issue 18 would increase the local income tax from 1.5 percent to 2 percent.|
|South Carolina Florence's Sales and Use Tax Referendum will decide whether to extend a temporary 1 percent sales tax currently scheduled to expire in 2014 by seven years.|
|Tennessee Memphis Sales Tax Referendum increases the sales tax by 0.5 percentage points.|
|Texas Amendment 1 adds a property tax exemption for spouses of members of the military killed in action.|
|Texas Amendment 3 extends the current 175-day limit to qualify for exemption from the property tax on aircraft parts.|
|Texas Amendment 4 adds a property tax exemption to partially disabled veterans if the home was donated by a charity.|
|Texas Amendment 6 allows local governments to use the state's Rainy Day Fund for local water projects.|
|Utah Kaysville Proposition 5 requires the local municipal utility to refund revenues in excess of its costs.|
|Washington Leavenworth is voting on increasing the sales tax rate by 0.1 percentage point.|
Despite conventional wisdom that the Bush-era tax cuts disproportionately benefited the wealthy, the reality is that the tax burden on the bottom 99 percent has been falling for more than two decades. Indeed, the average tax rate for the bottom 99 percent of taxpayers is now below 10 percent—well below the average for all taxpayers—thanks to years of targeted tax cuts aimed at the middle class. Meanwhile, the top 1 percent of taxpayers still pays an effective tax rate that is roughly twice the average for all taxpayers.
For more charts like the one below, see the second edition of our chart book, Putting a Face on America's Tax Returns.
Everyone knows the U.S. has high tax rates on business and that these rates need to come down. But just as importantly is what the U.S. tax code classifies as income. Currently the tax code has a heavy bias against savings and investment. While there are tax expenditures that try to correct for this, looking at tax reform from a revenue neutral, “blank slate” perspective, starts the debate with the wrong slate.
To help pay for the revenue neutral rate cuts to 25 percent, one tax provision that could be considered as a source of revenue is depreciation (the schedule under which businesses can claim business expenses). Moving from the Modified Accelerated Cost Recovery System (MACRS) to the Alternative Depreciation System (ADS) for corporate and non-corporate businesses would stretch out a business’s write-offs for investments over a longer period of time and raise $641 billion in revenue for the Treasury, but would result in lower investment at the firm level and economy wide.
This is because depreciation generally overstates profits and understates expenses and allows inflation to cut away at a business’s cost recovery. This leads to a larger tax bill for a business than would occur under the correct definition of income (revenue less costs).
But in a recent paper, our senior fellow, Stephen Entin, presents a solution to finding the revenue we need without damaging the economy. It’s called the Neutral Cost Recovery System (NCRS).
NCRS modifies ADS to retain more of the present value of the MACRS system while still allowing for slower write-offs during the budget window.
Full NRCS would eliminate the bias against savings created by the current depreciation schedules, specifically preventing the additional damage that a shift to ADS would cause. It does this by using the ADS system, but accounting for inflation and the real discount rate (which represents the opportunity cost of the capital invested into equipment, buildings, and machinery instead of something else).
In the end, NCRS treats investment neutrally, granting businesses 100 percent cost recovery on their investments, even under the longer depreciation schedule. Unfortunately, NCRS would bring in $179 billion less in revenue than ADS. But this isn’t as much of a problem as it would initially seem.
One solution would be to phase in the corporate rate cut as so many international countries have done. If Congress were to phase in the corporate rate cut over three years, it would save $88 billion. If it were to phase in the rate cut over five years, it would save $210 billion and completely pay for NCRS, with money to spare.
More crucial than revenue, though, it’s important that tax reform achieves the economic growth the economy needs. A lower tax rate for businesses is a big part of that goal, but in order achieve maximum growth, the tax code needs to move towards neutrality, not away from it. There are solutions to achieve tax reform without wrongly defining income; neutral cost recovery and a phase in on tax rate cuts for businesses are possible solutions.
While there were many attempts at stimulus during the “Great Recession,” none were as memorable as the “Cash for Clunkers” program.
This program encouraged individuals who owned cars with poor gas mileage to trade in their car for a more fuel efficient vehicle through $2.85 billion in vouchers. Proponents argued that this would spur demand in the economy and help mitigate the effects of the recession.
While this program was very popular, causing the exhaustion of voucher money within days, opponents argued that the program would not do much to stimulate the economy.
According to a new report from the Brookings Institution, the opponents of the program were right. Rather than increasing overall economic activity (the goal of an economic stimulus), it simply shifted economic activity from one period to another. From the report: “Our evaluation of the evidence suggest that the $2.85 billion in vouchers proved by the program had a small and short-lived impact on gross domestic product, essentially shifting roughly a few billion dollars forward from the subsequent two quarters following the program.”
The following chart shows the spike in vehicle sales in mid-2009.
The report also indicated that the program also benefitted wealthier individuals, who would have purchased new cars anyway.
If the results of this study sound familiar, they should. This is exactly the issue with sales tax holidays, which operate on the same principle: give people a short-term incentive to consume and they will increase their consumption. However, like the cash for clunkers program, sales tax holidays also fail to boost economic activity and merely shift it from one period to the next.
Yesterday, the Office of Management and Budget and the Treasury reported that the United States’ budget deficit during fiscal year 2013 was $680 billion dollars. This represents a 44 percent reduction from the $1.09 trillion deficit from fiscal year 2012. The deficit is 30 percent smaller (in dollars terms) than the $972 billion OMB projected for 2013. While this seems like good news for the time being, it is unlikely to last as spending on entitlements will increase.
The deficit is now 4 percent of GDP, which is smaller than last year’s 7 percent, but still a slightly larger deficit than the average since 1979. As the chart shows, the government’s deficit peaked at 10 percent of GDP in 2009 at the height of government spending and the recession. Most recently, the deficit has shrunk from that high as stimulus spending has declined and the economy has slowly recovered. However, the newest numbers show a much faster reduction than the OMB projected. The deficit is 2 percentage points lower than the 6 percent they first predicted.
This reduction is mostly driven by an increase in tax revenues over last fiscal year. In 2012, OMB reports that the government collected $2.4 trillion. It projected that in 2013, the government would take in $2.71 trillion. However, the government reported revenues of $2.77 trillion, a 13.3 percent increase over last year and 2.3 percent over what they projected. Revenues are now 16 percent of GDP which is slightly lower than the average of 18 percent since 1979.
The deficit also shrank from a reduction of spending. Due to troop drawdowns, lower unemployment compensation spending, and sequestration, government spending declined 2.4 percent from $3.53 trillion to $3.45 trillion. This is $230 billion, or 6 percent lower than the OMB expected and an $8.3 billion absolute decline from last year. As a percent of GDP, spending is now 20.8 percent of GDP, which is also slightly lower than the average of 21.2 percent since 1979.
Although this is generally good news—government spending declining and revenues increasing—it is important to keep in mind the government’s long term finances. According to the CBO, the deficit as a percent of GDP was expected to shrink in the next couple of years. However, as Social Security, entitlement spending, and interest on the debt grows, the deficit will increase again. By 2022, the deficit will be back to around 4 percent and grow every year after. The following chart shows that under CBO’s current law assumptions, government spending will continue to climb far into the future, possibly reaching near 40 percent of GDP, absent any meaningful entitlement reforms.
People mistakenly believe that because the rich benefit from many popular tax deductions and credits, they pay a lower average (or “effective”) tax rate than other taxpayers. This is not the case. The average tax rate for all Americans is about 10.4 percent. However, taxpayers earning over $1 million pay a 23 percent effective rate and taxpayers earning over $250,000 pay a 21 percent effective rate— more than twice the national average.
Meanwhile, “middle class” taxpayers earning between $50,000 and $100,000 pay an effective rate below the national average—just 9 percent. The effective tax rate for Americans making less than $30,000—who owe no income taxes—is actually negative due to refundable credits that give them a check back from the IRS.
One website estimates that more than 750 million pumpkins are carved into jack o' lanterns each October. While the practice brings joy to many, it created heartburn for Iowa tax officials six years ago, who were dismayed that so many people were decorating their pumpkins.
You see, Iowa (like most states) taxes retail sales but exempts groceries. Pumpkins used for decoration should have been taxed but were slipping by because they were also food. So in 2007 they sent a bulletin to retailers, reminding them to quiz customers on whether they were buying the pumpkin to eat (not taxable) or decorate (taxable):
Pumpkins: Pies and jack-o'-lanterns
The Department recently refined its position on whether pumpkins are subject to Iowa sales tax to more closely match what we believe to be their predominant use.
In the past, pumpkins were exempt from sales tax as a food (edible squash), even if they were to be later made into jack-o'-lanterns or used as decorations.
Our position now is that pumpkins are taxable if:
1. They are advertised to be used as jack-o'-lanterns/decorations, or
2. It is understood that they will be used as jack-o'-lanterns/decorations
Pumpkins are exempt in the following circumstances:
* The buyer completes a sales tax exemption certificate stating they will be used as food, or
* The pumpkins are a specific variety used to make pumpkin pies and are advertised in that way, or
* They are purchased with Food Stamps.
Retailers who sell pumpkins should keep these guidelines in mind and make any necessary changes to their tax treatment of pumpkin sales.
We shed some light on the silly Iowa rule, noting: "It's a weird tax system that taxes the same item differently depending on the buyer's intent. I'm sure Iowa pumpkin patches have better things to do than quiz their customers on future pumpkin uses."
The blogosphere picked up on our post, which led to local news coverage, and finally Iowa officials rescinded the pumpkin tax a few days later. One less silly tax thanks to our blog readers!
Slow economic growth still hinders the United States. Unemployment remains above 7 percent with about 5 million fewer full time workers than in December of 2007 and wages continue to stagnate.
There is a solution to poor economic growth. Though there is no a silver bullet to our economic problems, real tax reform could free the economy to grow.
If the U.S. were to cut its top individual rate and corporate rate down to 25 percent, while changing nothing else, GDP would increase by 4.74 percent and wages would increase by 2.74 percent. But there is no need to just stop there.
In a recent paper, our chief economist William McBride has 12 steps to improve the U.S. economy through tax reform.
1. Cut the Federal Corporate Tax Rate
The combined U.S. statutory corporate tax rate is the highest in the developed world at 39.1 percent (35 percent federal rate plus an average of state and local rates).
2. Improve Capital Allowances
U.S. businesses are generally not allowed to immediately deduct the cost of investments in buildings, machines, and other equipment. This is bad for investment. Instead, the tax code should be neutral, so that businesses are free to grow and invest.
3. Move to a Territorial Tax System
The U.S. is one of only six developed countries that continue to tax on a worldwide basis as opposed to territorial. This puts U.S. businesses operating abroad at a distinct disadvantage.
4. Reduce Shareholder Taxes
To make America more competitive, remove double taxation, and increase the incentives to save and invest, it is imperative that shareholder taxes, as well as taxes on interest, come down from current levels. Increasing these rates would have a damaging effect on the economy.
5. Lower Tax Rates on Pass-Through Business Forms and other High-Income Filers
In the U.S., more than half of all business income is taxed under the individual income tax code, not the corporate code. These businesses face top marginal tax rates of above 50 percent in high-tax states.
6. Eliminate Estate Taxes
Estate taxes are an additional layer of tax on saving and investment after taxes on wage income, corporate income, and shareholder income. Full repeal of estate taxes at the federal and state level would boost saving and investment and add some clarity, certainty, and fairness to the tax code.
7. Eliminate the Alternative Minimum Tax
One of the best ways to simplify the code is to repeal the AMT and instead reduce the unjustified tax preferences in the regular code that allow so much variation in tax rates across filers.
8. Eliminate PEP and Pease
The Personal Exemption Phase-out (PEP) and the Pease limitation of itemized deductions introduce the extra economic harm of extremely complex rules that reduce transparency in the law and cause marginal tax rates to go up over a certain range of income and then come down again.
9. Eliminate “Obamacare” Taxes
There are more than twenty separate taxes in the Affordable Care Act, all of which are poorly structured and difficult to comply with, and they increase the federal tax burden by more than $1 trillion over ten years. The ACA was supposed to be a healthcare system, but it became a vehicle for taxing particular industries, favoring others, while hurting incentives to save and invest.
10. Eliminate Corporate Welfare in the Tax Code
The tax code is littered with numerous corporate welfare programs meant to spur certain industries or activities, such as the various credits and deductions related to renewable energy and energy-efficient products like hybrid vehicles, appliances, and windows.
11. Eliminate Refundable Tax Credits
Refundable tax credits, tax credits that exceed the recipient’s income tax liability, are the fastest growing tax breaks in the federal tax code.
12. Maintain or Improve Other Provisions that Protect Savings and Investment
Protecting provisions that help correctly define the tax base (such as accelerated depreciation, retirement accounts, different rates on capital gains and dividends) would go a long way toward raising the chronically low savings rate in the U.S., giving workers more income security through the ups and downs of a typical career and giving investors more access to scarce capital.
When Congress voted to end the government shutdown and suspend the debt ceiling until February, they also set a bipartisan budget conference whose goal is to come up with a long-term budget solution.
The last time Congress put together a bipartisan conference, or “super committee,” the process resulted in no deal and the sequester cuts took their effect.
Now another committee will try again with 22 Senators and 7 House members starting today.
Going into the meeting, the Senate Democrats have expressed interest in cancelling the sequester, which is set to reduce spending again in January. Others are looking for modest entitlement reform to reduce spending. According to NBC, Representative Paul Ryan said he’d seek “modest reforms to entitlement programs.” Senator Rob Portman also said entitlement reform could be a target, citing some of the entitlement reform plans put forth by President Obama in his 2014 budget such as raising Medicare Part B costs for wealthy seniors and adjusting Social Security by the more modest Chained-CPI.
Some also suggest that changes to tax law could be on the table. However, due to the divergent goals of the Republicans and Democrats over whether tax reform should raise revenues or focus on economic growth, it is highly unlikely any comprehensive reform could come out of this conference.
The top 1 percent of taxpayers pay a greater share of the income tax burden than the bottom 90 percent combined, which totals more than 120 million taxpayers. In 2010, the top 1 percent of taxpayers—which totals roughly 1.4 million taxpayers—paid about 37 percent of all income taxes. This is a big jump from 1985, when the top 1 percent paid a quarter of all income taxes. Indeed, the income tax burden on the bottom 90 percent has dropped by one-third since 1985.
The top 10 percent of taxpayers now pay more than 70 percent of all income taxes compared to about 55 percent of all income taxes in 1985. Meanwhile, the share paid by the bottom 50 percent of taxpayers (about 67 million in total) has declined over the past 25 years, from 6.5 percent in 1985 to just 2.4 percent today.