A humble attempt to provide some clarity on the question of taxes

Harvard economist Greg Mankiw posts data (2005 data) on the average federal tax rates (tax liability / income). It shows that the top quintile (20%) pays an average tax rate about 6 times what the bottom quintile pays, 25.5% versus 4.3% This is all federal taxes - income, payroll, and excise taxes. This is so because we have a progressive tax system - the higher your income the greater percentage of that income is paid in taxes. But, it is only the income tax that is progressive.

Some more data though adds clarity. That same year the highest quintile (20%) of households earned about 55.1% of all income. They paid about 68.7% of all federal taxes. The lowest quintile earned about 4% of all income and paid about 1% of all taxes. Still progressive. However, if you add state and local taxes - sales and property taxes and in some cases an income tax - it is less progressive. Sales and property taxes are not progressive and only some states have a progressive income tax. (A good graph can be found here but I can't find the source and am curious to see if it is accurate) Simple interpretation, while rich folks pay a higher percentage of their income than do less affluent people on income taxes, less affluent people tend to pay higher percentage than rich people on payroll and sales taxes.

It should be noted that there is progressivity on the spending side - poorer folks benefit disproportionally from the spending - at least as measured by direct transfers.

My comment: We'll waste all kinds of energy and emotion on debating and provoking with respect to "taxes on the rich" (how progressive our income tax code should be) when the more important argument should be had on tax simplification and role and size of government. Eliminating the more distortionary taxes - capital gains and the payroll tax - in a tradeoff for higher income taxes all around would help. I'd throw in a higher gas tax too to help offset the increase in income taxes. A simple and predictable flat tax on income beyond a certain level of income (the bottom quintile pays no income tax right now anyway) would increase efficiency and clarity.

Consider for a moment the distortionary nature of the mortgage interest deduction. It is a subsidy that goes to rich and middle income alike yet the idea is to encourage home ownership. Does anyone thing that higher income people would not own a home were it not for mortgage interest deductibility? It increased home prices; that's what subsidies do. It encouraged people to buy more house - get a bigger mortgage - than they otherwise would have. It encouraged people to borrowing against their house in order to consume - so much for eliminating the deductibility of consumer loans. It is bad energy policy; bigger homes use more energy.