Who’s really paying more in taxes?

by Caleb Reading

I sometimes hear people citing statistics about how much the top 50% income earners pay in taxes, but the people who bash the poor this way never point out that they’re only talking about income taxes, (they never cherry-pick regressive forms of taxation), and they never compare it to the proportion of the money they take home. (How can the bottom 50% pay 50% of the income taxes as their “fair share” if they only get 13.2% of the adjusted gross income?)

According to Wall Street Journal 1/22/02, the 1999 tax info from the IRS released by the Congress’s Joint Economic Committee States the following:

By Adjusted Gross Income (AGI):

Top 1% earners by AGI paid 36.2% of income tax to the Feds.
Top 5% earners by AGI paid 55.5% of income tax to the Feds.
Top 10% earners by AGI paid 66.5% of income taxes.
Top 25% earners by AGI paid 83.5% of income taxes.
Top 50% earners by AGI paid 96.0% of income taxes.
Bottom 50% earners by AGI paid 4.0% of income taxes.

(this DOES NOT include payroll, sales tax, estate tax, excise taxes, etc.)
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There’s also this, more data from that WSJ article cited above:

The top 1% earn 19.5% of the AGI and pay 36.2% of the taxes
The top 5% earn 34.0% of the AGI and pay 55.5% of the taxes
The top 10% earn 44.9% of the AGI and pay 66.5% of the taxes
The top 25% earn 66.5% of the AGI and pay 83.5% of the taxes
The top 50% earn 86.8% of the AGI and pay 96.0% of the taxes
The bottom 50% earn 13.2% of the AGI and pay 4.0% of the taxes

So, yes, there is a disproportion there.

But wait, that figure above does not include payroll taxes. Here’s that statistic. Values are rounded to the nearest full percentage on this one.

The top 1% made 19% of AGI and paid 9% of PT
The next 4% made 15% of AGI and paid 13% of PT
The next 5% made 11% of AGI and paid 11% of PT
The next 15% made 22% of AGI and paid 24% of PT
The next 25% made 20% of AGI and paid 25% of PT
and the bottom 50% made 13% of AGI and paid 18% of PT

Ain’t it just inconvenient when the disproportions go both ways and you have to actually look at both sides of the issue?

So, using the 60/40 breakdown in fed receipts between FIT and PT the combined totals would look like this:

The top 1% made 20% of AGI and paid 25% of these taxes
The next 4% made 15% of AGI and paid 17% of these taxes
The next 5% made 11% of AGI and paid 11% of these taxes
The next 15% made 22% of AGI and paid 20% of these taxes
The next 25% made 20% of AGI and paid 18% of these taxes
and the bottom 50% made 13% of AGI and paid 9% of these taxes

Funny how this disproportion drops when we don’t conveniently ignore payroll taxes. But there is still some disproportion. I wonder what would happen if we dropped those at or below the poverty line out of the statistic, since they can’t theoretically pay anything and therefore skew the numbers. Would the disproportion disappear?  Would the bottom 50% minus poverty liners be actually paying more than their share?  And what if we included sales taxes and fees (car tags, drivers’ licenses, etc), which are all regressive forms of taxation?  Then who’s paying a larger proportion?  I don’t know, to be honest, but it’s something to consider before we start claiming that the rich have got it oh so hard.

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