Warren Buffet was right

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." -- Warren Buffet, New York Times, November 26, 2006.

I ran across some interesting data from the Congressional Budget Office recently. It shows the tax rate, the share of the tax burden, and the share of income for each 20% of income earners in the US from 1979 to 2006. The link's at the bottom of this post.

Conservatives like to claim that the rich are paying more of the federal income taxes, and they're correct. In 1979, the top 10% of income earners paid 48.1% of all federal income taxes. In 2006, they paid 72.8% of all federal income taxes.

But that ignores the fact that at the same time their percent of all taxes paid went up, their effective tax rate went down. In 1979, the effective federal tax rate for the top 10% of earners was 17.4%. In 2006, it had declined to 16%. The fact is that everyone's federal tax rates have gone down. Our federal income tax rates are now at their lowest point since the Truman Administration. That's right, we aren't being "taxed to death". We're paying lower taxes than the greatest generation did.

The CBO data also tells another story. To see, let's look at what happened to those income brackets over the same 27 years from 1979 to 2006. First of all, remember that each bracket represents 20% of the wage earners, so each of the five brackets represents about the same number of people.

Pre-tax income
In 1979, the average pre-tax income for the middle bracket was $52,700 and the average pre-tax income for the top 10% of earners was $136,400. The top 10% earned roughly two and a half times what the middle bracket did.

In 2006, the middle bracket earned $60,700, while the top 10% of earners brought in $248,400. The top 10% were now making about four times as much as the middle bracket.

In those intervening 27 years, the income for the middle class had gone up by 15%, while the income for the top 10% had gone up by a whopping 80%.

Share of income
in 1979, the middle bracket accounted for 15.8% of all income in this country, while the top 10% accounted for 30.5%. Twenty-seven years later, the middle quintile accounted for 13.2% of all income, and the top 10% accounted for 41.6%.

The middle class's share of of all income earned actually shrank over those twenty seven years. Of the five income brackets, the lowest four all lost ground during that same time frame. In 1979, the bottom 80% of all earners accounted for 54.5% of all income earned. In 2006, their share had dropped to 44.3%.

Over the two and a half decades from 1979 to 2006, there has been a massive transfer of wealth in this country. From the poor and the middle class to the wealthy.

So the next time some conservative complains about "class warfare", tell them they're right about class warfare, but wrong about who's waging it and who's winning it.

CBO report