from prior message -
...and what percentage of the taxes are paid by the top 10%?
Probably somewhere around 25%.
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Progressivity and the Tax Burden
Our tax system, however, is highly progressive, meaning that as one's income rises, a higher proportion of that income is taxed. Thus, those in the highest tax brackets contribute more to the overall tax burden even though there are far more people in lower tax brackets.1
According to data from the IRS, the bottom 50 percent of income earners pay approximately 4 percent of income taxes.
The top 25 percent of income earners pay nearly 83 percent of the income tax burden, and the top 10 percent pay 65 percent.
The top 1 percent of income earners pay almost 35 percent of all income taxes.
Rising Federal Taxes for the Rich
The empirical evidence shows that the wealthiest citizens are also paying an ever-increasing proportion of all taxes collected by the federal government. Data from the Congressional Budget Office show not only that taxes on the wealthy have risen over time but that the 2001 Bush tax cut barely kept their share of the tax burden from rising further:2
In 1984, after the Reagan tax cut had been fully phased in, the bottom quintile (20 percent) of income earners paid an average federal tax rate (individual, payroll, corporate and excise) of 10.2 percent.
The top quintile of earners paid 24.5 percent and the top 1 percent paid 28.2 percent.
In 2001, after the first Bush tax cut had taken effect, those in the bottom quintile paid average federal income taxes of 5.4 percent, about half of what they did 20 years ago.
Those in the top five percent saw a slight decline in their federal tax rate (28.6 percent, down from 29.7 percent).
The top 1 percent, however, saw their overall federal tax burden increase slightly, from 33 to 33.2 percent.
Despite the accusation that it was the very wealthiest who benefited the most from the 2001 tax cut, their federal tax burden stayed level at best and increased at worst. Progressivity in the tax system rose and the wealthy now pay about six times more than the poor.
We can also look at the overall share of federal taxes paid to detect a similar pattern. For example:3
From 1984 to 2001, those in the bottom quintile saw their share of the total tax burden drop from 2.4 percent to 1.1 percent.
Those in the top quintile saw their share rise from 55.6 percent to 65.3 percent.
The top 10 percent increased their share from 39.3 percent to 50 percent; the top 5 percent's share rose from 28.2 to 38.5 percent; and those in the top 1 percent saw their share skyrocket from 14.7 percent to 22.7 percent.
Overall, the poor paid about half as much of the federal tax burden in 2001 as they did in 1984, while the rich paid about 50 percent more. Even those in the middle class, often said to be hit hardest by increasing taxes, saw their share decline by about a third.
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taxesandgrowth.ncpa.org |
