The top 1% of taxpayers pay 38% of all individual income tax and that’s double their share of all income earned in the USA.
The top economic 25% of Americans pay 97% of all individual income tax collected.
The latest annual release of IRS Collections Data is available and it shows that, far from what you hear from the legacy media, not only do the rich pay tax, but they pay double their share, based on their share of all individual income earned in the United States. The most recent data covers tax years 2001 through 2013 and a summary of the 2013 data can be found on our annual IRS Data Update page. On that page, you can also find links to the IRS website, where you can download the complete IRS spreadsheets, from which this data was derived. (Yes. That’s 2013 data. The IRS gives us till April 15 to close our books and pay our taxes, but it takes them almost two years to close their books. Go figure.)
Before anyone makes an incorrect assumption about tax breaks for the rich affecting these numbers, it’s important to note that the numbers in this IRS data represent actual “collections”. It’s money deposited in the U.S. Treasury. These numbers are totals, after all adjustments, deductions, exemptions, credits, and even after the effects of cheating. It’s what was ultimately paid by each income group.
There is one more thing that we need to consider, before looking at this data. Think back to when Mitt Romney claimed that 47% of Americans don’t pay tax, but he couldn’t cite a source for that number. Well, it turns out that Romney was wrong… but not in the way the media tried to paint the issue. It turns out that his number was low. Data from the non-partisan Joint Committee on Taxation (JCT) reveals that, in fact, 51% of Americans don’t pay tax. Their actual words were, “… approximately 22 percent of all tax units, including fliers and non fliers, will have zero income tax liability, approximately 30 percent will receive a refundable credit, and approximately 49 percent will have a positive income tax liability.” For the record, “tax units” are roughly equivalent to “households”. To download the original Joint Committee on Taxation PDF document, from the U.S. Senate website, click here. Then look near the bottom of the first page, to see just how many Americans don’t pay tax.
This means that the top 50% of taxpayers is really only the top economic 24.5% of Americans. For our purposes, we’ll round this number to 25%. It also means that the top 1% of taxpayers is really only the top economic 0.49% of Americans. We’ll round this to 1/2%. So, in the table below, considering that roughly half of Americans don’t pay any income tax, the percentile of taxpayers (taken from the IRS Collections Data) is dimmed, while the calculated percentile of all Americans is bolded, in order to emphasize that the percentile of all Americans is the more important number.
Here are just a few of the things that the new data shows us.
|Top 50%||Top 25%||97.21%||Percent of all individual income tax actually collected|
|Top 1%||Top 1/2%||37.8%||Percent of all individual income tax actually collected|
|19.04%||Percent of all individual income earned in the USA|
|27.08%||Average tax rate|
|2.79%||Percent of all individual income tax actually collected|
|11.49%||Percent of all individual income earned in the USA|
|3.3%||Average tax rate|
From the above, we can make the following calculations.
- The top 1% of taxpayers paid double their share of tax based on income earned
(37.8 ÷ 19.04 = 2 times their share of income).
- The bottom 50% of taxpayers paid one-quarter of their share of tax, based on income earned
(2.79 ÷ 11.49 = 0.243 times their share of income).
Keep in mind that all of these numbers are averages, for the whole of each income group. In every income group, there are those who take advantage of every tax break and some who even claim tax breaks to which they aren’t entitled, thus paying less than the average for that group. But at the same time, there are others, who pay more tax than necessary, because our overly complex tax code caused them to miss taking deductions to which they were legally entitled, thus causing them to pay more than the average for that group. But in both cases, those people are exceptions. The above numbers, from the IRS Collections Data, are averages for the whole of each group and they represent actual collections, after all tax breaks (legal or illegal) have been taken.
What this all boils down to is that, whether based on tax rates (28% versus 3%) or tax share versus income share (double share versus one-quarter share), the rich really do pay far more tax than any other income group.
But this attack on wealth in the USA is having an unintended consequence. Wealthy Americans are leaving the USA and renouncing their cherished U.S. citizenship in record numbers. When talking about record numbers, we’re not talking about marginal increases. We’re talking about an expatriation rate that is 1800% higher than the expatriation rate that Obama inherited from George W. Bush. So what this all boils down to is that you have to ask yourself one question.
When the wealthy leave, who will pay all those taxes that the wealthy used to pay?
It’s time for a sane tax system that is not open to playing favorites. It’s time for the FairTax.