First off, the table in your link is not clear about what "Payroll tax" is. In general Payroll taxes are ALL taxes withheld from the employee's paycheck, so that includes FICA as well as federal income tax and state tax. Given the graph title, I'll make the leap of faith that The Tax Foundation (whoever they are?) was just sloppy with their labelling, and not their data, then a little bit of work gives the following:
They assume you know the difference between payroll and Federal tax, but if you don't they provide a very detailed explanation of their terms and methodology in this PDF. It makes for good reading if you are having trouble sleeping:
taxfoundation.org
BTW You are right, the table I linked to doesn't provide proof that the bottom half pay such a small percentage of FICA, primarily because I linked to a table that doesn't divide households, it divides individuals, a serious flaw. The table I pointed to doesn't use the more common division by household with uneven numbers of individuals even though it states "household" it divides into 5 equal quintiles of individuals and uneven numbers of households.
I'm much more familiar with the breakdown of actual households or taxpaying entities because that is the kind of data the IRS and Census uses and publishes. It makes little sense to put equal numbers of individuals in each quint because obviously we always have a percentage of the population that doesn't work at all (they are dependents) and have no income.
Plus, individuals with very low incomes sometimes reside in wealthy households and end up paying much higher tax rates because of that although the inverse is more likely true, high income people are clustered in the top quintile of households. A person making minimum wage, married to a person with a high marginal rate, in a tax bracket where deductions are phased out due to AMT, has not only FICA to pay but income tax as well. A single head of household with two kids making minimum wage can have a negative tax rate where they receive up to $4716, beyond what they pay in FICA, a very serious difference in effective tax burdens for the exact same income.
The Tax Foundation does give the number of actual households represented within each quint and it is seriously weighted to the first two quintiles with only a very small number of households that would fall in the bottom half in that middle. 54,898,252 households to be exact are represented by the first two quints (out of 113 million households in the US in 2004) This would explain some of the difference between our percentages but the table doesn't tell us where in the distribution of household income these individuals reside.
They give an alternative on page 87 of the PDF but, drats, don't breakout payroll taxes. Either method shows that the US federal tax burden is still highly progressive and very close to what you have stated is the ideal split of tax burdens, if all income and tax payments were lumped.
While it is undoubtedly true that the low income earners pay a higher percentage of their Federal tax as FICA because they pay little or no income tax, the high income earners pay a much higher marginal rate as well as FICA and the various deductions are seriously phased out making their average tax burden much higher. They also less likely to be on the receiving end of a Federal transfer payment. The marginal rate starts at zero and ends at 35% before you factor the EIC which makes it a negative number on the low end, a low income head of household with two kids can have a 30% negative rate.
What they also fail to do is include in that table are amounts sent back to lower income tax payers in the form of EIC. They cover government transfer payments elsewhere in the PDF as a study of household incomes.
As you can see from this table EIC is quite extensive and the main reason I can say that without a doubt, the greatest majority of all Federal taxes paid, are paid by the top two quintiles of households:
unclefed.com
They instituted the EIC primarily because of concerns that FICA was becoming and would become a progressively larger percentage of taxes paid by the bottom half as benefits ballooned as a percentage of government outlays. But also a negative tax rate paid to people who work avoids the work disincentive of a welfare program. Basically it addresses the issues brought up by you and Dan, at least for the bottom of the income distribution who have children. The EIC was expanded greatly under the Bush administration. I've helped numerous friends and family members claim it since I know a lot of low income people who have trouble doing their own taxes without help and are unlikely to hire someone for tax help. I do this even though I pay someone to do my own taxes! Still many people eligible for the credit don't claim it, mostly individuals with no children and the benefit is small, because they use the short form.
From the IRS site:
Amount of credit increased. The maximum amount of the credit has increased. The most you can get is:
$2,853 if you have one qualifying child,
$4,716 if you have more than one qualifying child, or
$428 if you do not have a qualifying child.
Earned income amount increased. The maximum amount of income you can earn and still get the credit has increased. You may be able to take the credit if:
You have more than one qualifying child and you earned less than $37,783 ($39,783 if married filing jointly),
You have one qualifying child and you earned less than $33,241 ($35,241 if married filing jointly), or
You do not have a qualifying child and you earned less than $12,590 ($14,590 if married filing jointly).
The maximum amount of adjusted gross income (AGI) you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.
Investment income amount increased. The maximum amount of investment income you can have and still get the credit has increased to $2,900.
Advance payment of the credit. If you get advance payments of the credit from your employer with your pay, the total advance payments you get during 2007 can be as much as $1,712.
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