Who Are Maine’s “Rich?”
In these dark economic times, the siren call of “tax the rich” is hurled at policymakers as the solution to Maine’s budget woes. The accusation is that the rich are just sitting on their money and having government take it from them in order to spend it will get the economy moving again. Of course, this caricature of the rich does not stand up to reality. This study analyzes data from the Internal Revenue Service for 2009 that shows the dramatic differences in the composition of income by various income groups. Simply looking at total income can be misleading if one does not understand the underlying income dynamics because today’s tax code includes a mishmash of personal and business income. This study also provides an illustrative example of how this can happen.