disappearances. do you have a comment on that? >> so we have been deeply troubled by reports that hundreds of piglet issues were forcibly disappeared over the past two decades. forced disappearance is an egregious human rights violation that inflicts trauma of indeterminate detention or disappearance on its victims. it also inflicts trauma of and certainty on the families. we welcome efforts by the interim government to investigate the crimes and encourage fair and transparent processes to provide justice for the victims and their family members. thanks, everybody.

our mission is to provide education about the system we have. we believe the tax system should be simple, it should be neutral, it should be transparent and stable. we study taxes at the state and local level, federal level and global level. and we are funded by a variety of donors from the business community, the foundation community and individual donors. >> from the studies that you do , when it comes to taxes, the latest one looking at federal taxes and who pays what, we are showing the audience your analysis >> each year the irs statistics of income division publishes data that comes straight from the tax returns we all file during the tax season and they provide an analysis on who pays

what, what average tax rates are. we take that and put it in a more digestible format than the huge tables available for download on the irs website. >> when it comes to who pays what, you take a look at what will the americans pay. before the details, what is the perception about what wealthy americans pay and what is the reality? >> i think there is a big perception about the tax system we have now that it's unfair. a big part of that is that the tax system we have is very complicated. i don't think anyone really enjoys filing taxes each year. it can be a rough process and it's not always transparent who is paying what. because of all the different deductions and credits and exemptions available in the tax system. that gives perception of unfairness. we also tend to see lots of

stories about individual taxpayers who maybe don't have a large tax bill in a given year. it creates a perception that high income taxpayers are getting a special break that low and middle income taxpayers don't have access too. of course the data tell a different story. that data comes straight from the internal revenue service. >> one of the things in your report is a breakdown from the data and it breaks it down from the top 1% going down from there. starting the top 1%, just to show the audience details about 1.5 million returns, average tax rate about 26%. when it comes to their share of total adjusted gross income, 22%. the total share of total income tax paid. 40.4%. put that into context as far as what they pay if you look at the top half of

tax payers, they're paying about 97% of income while the bottom part pays the 3%. we should expect given the graduated income tax rate structure that we have under the income tax system where when you earn higher income that higher income is subject to a higher rate within that rate threshold. >> is there a difference once the federal government establishes a tax rate what the top 1% actually pay? >> yes. so for every tax payer there's a difference between your marginal income tax rate, the rate you pay on your next dollar of income. say you're in the 10% bracket, each additional dollar you earn faces that 10% rate. or in the top bracket, each additional dollar earns that rate. the earlier dollars were tax debt lower rate because there

are tax credits like the child tax credit because we provide deductions, either the standard deduction or higher income tax payers take the various deductions for itemized deductions. the average rate can be different than the statutory tax rate you're in. >> is there a way to establish a profile of who lives in the 1%? who are these people generally as far as how they make that money? >> if you look at a breakdown of sources of income, you see variations. for most tax payers their biggest source of income is wage and salary. when you get to higher income levels, you see a different profile there. there tends to be more business income. passive business income is reported, income from partnerships, llcs, sole

proprietorship. you see a greater share of business income. you see a greater share of investment income, dividends, capital gains. >> back to that share of total income taxes paid, 40%, put that in perspective what the government takes in overall. >> in 2022 the year that this report is for, the tax payers paid a little over $2 trillion of individual income taxes. 40% of that $2 trillion number. quite a large share. it's important to remember that the individual income tax is the largest source of revenue for the federal government. even though there's other taxes, this is the largest one and the largest share is paid by the top 1%. >> this is erica york joining us for this conversation. if you want to ask about the break down of who pays what in

taxes in united states, please call in. this data from 2002, has much changed in the era we live in today? >> not much has changed. this is the latest available. the irs releases these data sets with a lag because they have to clean and analyze the data and get it into a usable format. nothing major has changed from 2022 to 2024 in the income tax system. we also provide in the analysis these trends over time going back a couple of decades so that you can see how tax rates have changed over the period and what you see is there's not a lot of variation unless there's a tax reform law that congress enacts that significantly changes things.

otherwise, the tax system kind of just generally hums along without major changes and the average tax rate that people of different income levels face. >> you talked about the top 1%. let's go down once here to the top 5%. what changes from what we know about that top 1%? >> you're capturing a greater share of tax payers who have a little lower income level. you see a slightly lower average tax rate overall. but generally you -- as you step down from the different percentiles you see a pattern that emerges that as income grows, so does the average tax rate. overall the structure that emerges is one of a progressive tax system. i would characterize it as a highly progressive tax system when you see the differentials between what those in the top half pay on average and in terms of the share of taxes paid,

compared to those in the bottom half. >> erica, you used the term progressive tax system. there's the term regressive tax system. what's the difference between the two? >> progressive tax system is where your income increases, your average tax rate increases. regressive is the opposite. it places a higher percentage burden on lower income tax payers than on higher income tax payers. >> we'll talk more as we get through the morning. i suppose all this comes as there's set to be a debate on the future of taxes in the united states. how does this information inform that debate? >> so what you see in this report and we've got a chart in the report that compares tax rates from 2018 onward to pre-2018. 2018 being the first year that the tax cuts from the tax cuts and jobs act of 2017 took effect. what you see is that that law lowered average tax rates for

tax payers of all income levels. since that law went into place, all income tax levels remained below their 2017 level. the takeaway is that if those tax rates expire, if the tax cuts expire and the system reverts back to what it was prior to the new law, that's scheduled to take place in 2026. we would expect tax burdens across the spectrum to rise. we estimated at least 62% of tax payers would see significant tax increases if that law is allowed to expire. >> this is erica york joining us from the tax foundation. your first call comes from jeffrey in florida, republican line. you're on with our guest. good morning. >> caller: good morning. i was wanting to know who defines what qualifies as income and how that definition has changed since the income tax was

initiated in 1913. >> the definition of income for this report here is adjusted gross income. that's the number you calculate on your form 1040. that's what the irs uses in this data set, whatever the definition for adjusted gross income was in that given year. since the inception of the income tax, it has changed significantly in scope, as well as in the types of deductions and credits and exemptions that are permitted. you can also find debate among economists about what should count as income. do we count it on an annual cash flow basis? do we count it on an accrual basis? for the purposes here the irs uses the adjusted gross income number from the form 1040. >> we have a follow up text from florida. explain the difference between income and assets and the tax liability of each.

>> income tends to be your wages and salary. it's realized capital gains, interest income, dividends, business income like i mentioned. it's captured in a year. so the irs operates on a tax year and for a given year we pay taxes on income earned within that year. assets are the entire holdings if you own stock, if you own your home, it's the value of all of that and the tax system generally doesn't apply to someone's total wealth. it doesn't apply to their assets until you sell your asset and realize a gain. at that point it would face the capital gains tax. >> here's valerie in michigan, democrat's line. >> caller: i would just like to know are we still under the trump tax cuts? i think you just said that. if it expires will poor and

working class people have a lower tax base to pay or will their taxes go up until he passes his new taxes and do you know if he has plans for the working, middle class poor to pay more taxes of their earned money? >> 2017 tax law is still in effect. it cut taxes beginning in 2018 and those individual tax cuts last through the end of 2025. as i mentioned, what you can see from the irs data is that this tax law has lowered average tax rates for people across all income levels. the bottom 10%, the top 10% on average tax payers of all income levels saw a tax cut. if this expires, which it's scheduled to in 2026, those tax laws would revert and people

would pay higher taxes. the major changes of the tax law were lowering the rates and widening the bracket, increasing the standard deduction, increasing the child tax credit, zeroing out the personal exemption, the effect of which boosted the benefits of having children for lower and middle income families by replacing an exemption with a credit. altogether resulting in reduction in average tax liabilities. trump campaigned on extending those tax cuts. there's desire in congress to extend those tax cuts. what exactly that looks like will play out in 2025 as congress and the white house work together to legislate on taxes. >> what do you think of the questions that have to be asked by congress as they consider what comes next? >> a big question is what do you do about the deficit impact? continuing all the tax cuts would reduce revenue by

$4 trillion and would add more when you consider interest costs. we'll be on a path with a higher deficit, higher interest payments, higher debt. what do you do to offset the cost? do you look at base broadeners and build on the reform that tcj made? do you look at reforms on the spending side? there's not an answer from congress yet. fiscal pressure will be weighing on lawmakers minds. >> there was a report on the possibility of expiration of tax cuts and what would happen if that did happen. they found the expiration would modestly reduce labor supply by raising tax rates on individual income, the tax income decreases, but on net those offset each other resulting in

small changes to the gross domestic product. what do you think about those results? >> it's absolutely right when the taxes go up that will reduce people's incentives to work. whether that's to enter the labor force or change their hours worked. it makes sense we would see a negative labor supply effect. the expiration of the tax cuts will also increase federal tax revenue. we can question how big of a -- the effect that's occurring here in those models are called the crowd out effect. they assume when the federal deficit goes down that provides more capital for businesses to be able to invest. there's a question of to what extent does that effect play out in the real economy because the u.s. is an open economy. if our deficit goes up, we have to sell more treasuries. there are also foreign buyers, not just domestic buyers for those treasuries.

i would discount a little bit the crowd out effect that's assumed there. it's a useful analysis to see that, yes, deficits and how we offset an increase in the deficit really matters for american income and the potential economic aspect of extension. >> here's eric in connecticut, independent line. >> caller: thank you for taking my call. my concern is everything looks pretty on paper. every time we hear on the news about loopholes and lawyers, that's my main question. the lawyer aspect and the corruption. if i was to go and fill out my taxes on a website to pay my taxes, within a week they're emailing me and telling me, listen, you made a mistake online 2a. that's the whole thing that my question is about. thank you. >> yeah, one of the things i

mentioned earlier is that we have a very complicated tax system. it's not transparent. lawmakers absolutely have an opportunity to reform the tax system, make it simpler and end a lot of deductions and exemptions and credits that are available that tend to be utilized by high-income tax payers. that base broadening is one of the best ways to raise revenue. it doesn't require you to significantly increase marginal tax rates. instead you broaden the tax base, get rid of some of the exemptions and credits and raise revenue that way which also aides in making the tax system simpler and more transparent. >> erica, you remember how house speaker paul ryan wanted to reduce it to one sheet of paper. what happened to that effort? did anything come out of that? >> they made some strides in doing that.

for instance it placed limitations on itemized deductions, significantly reduced the alternative minimum tax. it's a good aspiration to want to have such a simple tax code that it's not a hassle for people to file it, but that often means trading off provisions that tax payers enjoy, that tax payers like having in the tax system. so it creates a political obstacle to totally cleaning out the tax code because doing so means getting rid of preferences that benefit on different constituencies which can be a tough lift. we've done some simulations at the tax foundation looking at the tax system in the country of alstonia which ranks number one or comparativeness. it takes tax filers there about three minutes to file their returns.

adopting a system like what estonia uses would boost economic growth and raise sufficient revenue. again, it's that political challenge of can we clean up the tax code. >> this is erica york of the tax foundation. john in virginia, republican line. >> caller: good morning. thank you for taking my call. i would like to see if you could clear up something for me, ma'am. since donald trump's tax cuts democrats say they add to the debt. on television i see people talking about the tax, we're getting -- the united states treasury is getting record high revenue. how does record high revenue equate to adding to the debt? i don't understand. >> revenue would be even higher

if he didn't have the lower tax rates in place. there's some truth to that. when we score tax plans, we can do a conventional analysis. we'll assume that incentives don't change and look at how this would cut revenues. you can do a dynamic analysis that says when you change the tax system you change people's incentives for working and investing and you grow the economy. what you find on a dynamic analysis, tax cuts aren't as expensive as they look on a conventional basis, but tax cuts rarely pay for themselves. if you significant cut tax rates, boost tax credits, give people more of their money back then the government is left with less revenue at the end of the day. that's what we've seen play out. that congressional budget office report we were discussing, the cbo talks through why are

revenues higher. some is economic growth. some is inflation. some is unexpected sources of revenue like the higher tariffs trump brought in in his first term. it's a complicated question and a complicated analysis to sort out what is moving where. i think it's still fair to say that tax cuts reduce the revenue that the federal government brings in. >> we have a viewer in michigan who directs his comments to corporations. corporations are not regardless of what republicans say paying their, quote, fair share. >> a corporation is a legal entity. the legal entity cuts the check to pay corporate taxes. the burden economically falls on various people, corporate shareholders in the form of lower returns and workers in the form of lower wages. this is what the nonpartisan

congressional budget office finds. the burden of that falls on low and middle income households through lower corporate returns if they're invested, they have a pension, 401(k) and through lower wages remembering that economic burden of the corporate tax is important when we call for higher corporate tax. it's not just going to fall on wealthy shareholders. it's going to fall on workers at corporations too. >> jack is up next in atlanta, democrat's line. >> caller: hello. i would like to ask what share of agi income generated in the country is controlled or received by that top 20% and has the share been growing before tax and after tax over the past 10, 20 years, 30 years?

thank you. >> just know, erica, we're showing the viewers the top 25% category. go ahead please. >> great, thanks. i don't have all the numbers off the top of my head. in my report we have the full data tables available for download and it breaks down the different percentiles, shares of agi, shares of taxes. what you tend to see, especially with the top 1% in the share of agi is that it fluctuates significantly with the business cycle. if there are years where, you know, the stock market really boomed, capital gains realizations go up, then the share of income for the top 1% spikes upward and same when business cycles are on a downward path, the stock market goes down, that share drops. there's a report called the distribution of household income. it's produced on a yearly basis.

it's a greater lag than the irs data. the latest we have available is 2021. they go over shares of income before tax and transfers, after taxes, after tax and transfer. what you see from that report, especially on the tax side, they found since 1985 which is generally where the data begins for the report, the tax system has become ever more progressive every decade. even though you see some growing disparities pretax, pretransfer, the tax and transfer system we have has significantly boosted income of lower and middle income household. >> erica, the biden administration made a big event to go after wealthy americans not paying their taxes. janet yellen talked about that result. i want to play some of her comments and get your response. >> i'm glad to now share the first results of an initiative we launched to pursue 125,000

wealthy tax payers who had not filed taxes for years. the irs has not had the resources to pursue these wealthy nonfilers. now it does, and we're making significant progress. today i'm announcing that in only six months nearly 21,000 of these tax payers have already filed. that has led to $172 million recovered. this is just a first milestone. we look forward to more progress ahead. the irs has also made substantial progress to collect tax debt from wealthy filers. i'm glad to share today that nearly 80% of 1,600 millionaires with delinquent tax debt have

now paid leading to over $1.1 billion recovered. >> erica, i should note that was back in september. go ahead. >> tax payers should absolutely pay what they're legally obligated to pay. you know, reducing the tax gap, the difference between taxes owed and taxes paid, especially in areas that can be characterized as low-hanging fruit. if the irs knows that tax payers aren't paying and knows what they need to be paying, it absolutely makes sense to concentrate efforts there and get the most return for tax payer -- irs investment dollars as possible. a couple of efforts that are complimentary to this would be further simplifying the tax system to, again, get rid of these opportunities that tax payers have to not pay their -- what they're legally obligated to pay. another element to think about

with the irs funding, that the irs has warned about, is that some of the funding that the -- that congress provided was to go to i.t. upgrades, i.t. infrastructure, customer service and the burn rate on that money at the irs is very fast. it indicates that potentially too much has been allocated to enforcement at the expense of better i.t. services and better customer service. ensuring that the irs is investing where it gets the most return on those dollars should be a big part of the conversation going forward too. >> let's hear from joe in ohio, independent line. >> caller: you say that the tax cuts went across the board, but didn't they disproportionately go to the wealthiest? didn't the wealthiest receive the most benefit? >> yeah, so the -- if you look at the percentage change in

after tax income across the different income groups, the top 1% received a slightly larger tax cut than other income groups, but i think it's important to provide a couple pieces of context around that. the starting point of the tax system we have now is highly progressive. so providing a tax cut that provides a larger tax cut to lower income households is quite difficult when, if you look at the expected tax rates on the bottom 20%, even the bottom 40%, for many tax payers they're already negative. they're received more tax credits back than they pay in. given the progressive structure of the income tax itself, it lends itself to that type of distribution for a tax cut. often the rhetoric we hear is that, you know, lower and middle households didn't see any benefit. the data clearly states they

did. >> erica york is with the tax foundation. taxfoundation.org if you want to see her work. erica york, thanks for your time. >> thank you. >> we invite democrats only to call in and tell us what you think is the future of the democratic party. here's how you can let us know your thoughts 202-748-8000, 202-748- 202-748-8001. democrats only. you can also post on facebook and on x. about a month ago pew research did a poll of democrats following the election, getting their thoughts on the future of the party. 51% of the democrats and democratic leaning independence say they're somewhat optimistic,

49% are pessimistic. share of democrats who are pessimistic is 20% higher than after the 2022 election and yielded mixed results. 10 points higher than after hillary clinton's presidential defeat by mr. trump in 2016. pessimism is more pronounced among adults under age 50, 55%. liberal democrats 52% are more pessimistic than conservative and moderate democrats. that was about a month ago following the election. we asked democrats what they thought about the future of the party. the vice president yesterday speaking at a community college in maryland talking about not only the future, but among young people. "the new york times" tracked that speech saying that vice president harris suggested she

didn't intend to fade into the background after president-elect donald trump's victory and used her first major post election speech to urge young people to stay in the fight. ms. harris called on the crowd to maintain their passion and resolve. you can see that full speech on c-span. here's a portion from the vice president yesterday. >> i ask you to remember that this struggle is not new. it goes back nearly 250 years to lexington and concord. generation after generation it has been driven by those who love our country, cherish its ideals and refuse to sit passive while our ideals are under

assault. and now this fight to keep the light of america's promise and to ensure it burns bright, well, this fight now it continues with you. you are its heirs. we are are its heirs. so i'll end with this, get some rest over the holidays. spend time with the people you love. you know i believe family comes in many forms. there's family by blood and family by love. i urge you then after you have had some rest, in fact, i challenge you to come back ready. ready to chart our path to the future. chin up.

shoulders back. forever impatient for change. >> the vice president from yesterday. for democrats only in this first half hour, what's the future of the democratic party in your opinion? you can text us at 202-748-8003. you can post on our social media sites. this is steven saying his opinion as far as the future of the bright.party. it's very bright. democrats are prepared to clean up the mess in 2028. stay strong blue. this is from john, all our best people have left the party, tulsi, manchin et cetera. we need to get rid of the progressive agenda and start over. we might not have a party at the

rate we're in decline. this is from diane, young knowledgeable people are coming into their political selves with fresh ideas and new energy. out with the old and in with the new. it's the natural order of things. you can post on our social sites or give us a call. let's hear from john in st. louis, missouri, on the future of the democratic party. john, hello. >> reporter: >> caller: i think democrats will be great because donald trump is committing the crime of the century and democrats are encouraged. democrats will always be here. republicans break the law. i think that democrats are going to help america always. >> you think after the election, the last election, democrats have to do things differently? >> caller: i mean, we got

screwed by -- we didn't get screwed. we got man handled by a cheater. you know, donald trump breaks the law. that's all he does. we have to do better. >> john in st. louis, thank you. this is carolyn in ohio. carolyn, hello. >> caller: hi. i think that we need to have younger people. i'm a senior citizen so this is strange for me to say, but i think we have to have younger people in the democratic party and i know kamala harris was out talking to younger people and that's a start. but i heard on one of the stations where -- i can't remember his name. i want to say his last name is hogg. he's going after the --

>> david hogg, the vice chair of the democratic national committee. >> caller: thank you. he's going after a position. i don't think he's got it yet. i'm all for younger people. i know i personally am tired and i'm a senior citizen and i always want to be active and everything, but there comes a point where you need fresh blood and you need younger people because they have all the energy. i mean, i don't know how else to say it. >> besides david hogg any other names in mind that should be pursuing those positions or top positions? >> caller: well, it seems like the people that are trying that are younger are getting beat. i heard aoc got beat by gerry connolly and i heard he's going through what my husband died from, which was the cancer

esophogeal cancer. i don't understand that. if he's going through something as bad as that, but she got beat already and she was younger. i just don't understand -- we have all these talented young people that are just chomping at the bit to bring their energy to the party. so that's the only thing i can think of. we need more young people in there and give them a chance because they all seem like they're wonderful people, especially that david hogg. >> okay. carolyn, thank you for the segue. this is from the "wall street journal" talking about the new york democrat alexandria ocasio-cortez. she was defeated by gerry

connolly. representative gerry connolly defeated alexandria ocasio-cortez, putting him to be a protagonist of the president-elect. it said it was former house speaker nancy pelosi who has had a chilly relationship with ocasio-cortez, urging colleagues to back gerry connolly. democrats only on the future of the democratic party. in irving, texas, hello. >> caller: good morning. i'm david from irving, texas. the future of the democratic party needs to go to someone like jasmine crockett. that may sound bizarre and out of the box, but that's what i'm doing. when they go low, we need to go in the basement. trump got elected because he gave the people they didn't

have, or felt like they didn't have, and a voice that wouldn't back down. that's what i see jasmine crockett as. the different between trump and crockett, at least crockett is going to be honest. she's not going to take any crap off trump and his trumpys. the difference between democrats and republicans quite frankly is that republicans rule on fear. democrats are trying to be honest and do the right thing. when you look at the economy and all that joe biden has done, they really just got outspoken and outmaneuvered. that's what happened. trump didn't back down. he gave people, yeah, we got somebody that's going to fight. we need somebody like crockett in there. crockett as you can tell is not going to take their crap. she's not going to let them get away with cross talk, not going to let them get away with blowing up events and making them a lot more than they appear to be.