Heritage Foundation: Top 50% Pays 97% of All Federal Income Taxes
"The U.S. tax system is highly progressive. The top 1 percent of income earners, by household, paid 39 percent of all federal income taxes in 2005, whereas the bottom 50 percent paid a little over 3 percent. Further, 32 percent of all tax returns filed in 2005 were from people who paid no federal income tax at all."
Here are some other interesting graphs from the same presentation:
Context is needed. What percent of the nations income do the top 1% of earners capture? the bottom 50%?
Don’t know about top 1% but:
Top 5%: Income=22.3 Taxes=59.7
Bottom 50%: Income=19.0 (est.) Taxes=3.1%
Also see taxing questions, which shows how fewer people are paying taxes and the wealthy are paying a higher percentage of federal income taxes after Bush tax cuts.
We never see these stats on the MSM, because it’s puts the lie to the oft-repeated mantra that the Bush tax cuts put a heavier burden on lower income people. The opposite is true.
What’s frightening is that, because our tax system is now so progressive, people that pay little or no federal income taxes can cast their votes to increase the tax burden on those who do. That’s bad news.
Michael:
One caveat that should be mentioned because we are comparing taxes with overall spending–the tax chart does not include Social Security and Medicare. Those taxes are much flatter. We also know that they really are taxes and not insurance-types payments since they are just thrown into the pool and used for whatever purpose comes up, not held in any “lock-box.”
As a matter of fact, the Social Security tax is (arguably) regressive, since above a certain point on doesn’t pay the tax.
Clearly social security is a regressive tax. However, other data I’ve seen still shows the total federal impact is quite progressive.
Is the tax system fair? That is an important question but the idea that the wealthy don’t carry a disproportionate share of the federal tax burden doesn’t square with the data. It is also true that the Bush cuts made federal taxes more progressive not less so.
hi michael, i’m wondering if you’ve read the book, “perfectly legal” by david cay johnston.
Haven’t read it myself though I’ve skimmed through it at the book store and read reviews. A tax attorney friend of mine has read it and given me his take.
My perception is that Johnston makes a mountain out of the proverbial molehill. Studies consistently show that the lower the tax rate the greater the compliance. The time, effort, and risk involved in avoiding taxes becomes counter-productive compared to other more productive uses of time and resources.
I’ve little doubt that the wealthy have greater opportunities for shielding themselves from taxes but the idea that they do so to the point of making the tax system regressive smacks of conspiracy theory level thinking to me. 🙂
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