# Do the rich pay their fair share?

**URL:** https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817
**Category:** Great Debates
**Created:** [September 29, 2020, 3:25pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817 "2020-09-29T15:25:51Z")
**Posts on this page:** 1
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### Author: ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)
#### Post date: [September 29, 2020, 3:25pm UTC](https://boards.straightdope.com/t/do-the-rich-pay-their-fair-share/921817/1 "2020-09-29T15:25:51Z")

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I did a quick search and found very little specifically about this.

In association with the latest story about DJT’s tax returns, I heard a statistic that the wealthiest Americans pay an average of 24% in Federal Income Tax.

I presume they’re talking about [Effective Tax Rate](https://www.thestreet.com/personal-finance/taxes/what-is-the-effective-tax-rate-15102865).

But Effective Tax Rate reminds me of an old joke in medicine: The surgery was a complete success, but the patient died.

Sometimes, our definitions differ from the definitions used by others.

According to [Pew Research](https://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/):

> Effective tax rates – calculated as the total income tax owed divided by ADJUSTED [emphasis added] gross income – also rise with income. On average, taxpayers making less than $30,000 paid an effective rate of 4.9% in 2015, compared with 9.2% for those making between $50,000 and under $100,000 and 27.5% for those with incomes of $2 million or more."

But if I’m looking at this correctly, a very wealthy person could earn a billion dollars, and – after extensive deductions – have a taxable income of a million dollars.

Given a Federal Income Tax liability of, say, $100,000:

[taxes paid] / [adjusted gross income] = 10.000%  
[taxes paid] / [TOTAL gross income] = 0.010%

Not for nothing … our principle definition of Effective Tax Rate – the one bandied about constantly to help us understand how much the wealthiest Americans pay relative to the rest of us – seems to be … er … misleading or obfuscatory at best.

It seems to obfuscate the infinite well of deductions that a wealthy person may be able to take advantage of to reduce their taxable income and tax liability.

1. Does anybody else agree/disagree with my understanding of Effective Tax Rate and its common use ?

2. Has anybody seen “true” Effective Tax Rate (as I’m defining it – total paid [divided by] total made) by income … anywhere ?

I think it would be difficult to have really sincere and honest discussions about tax rates if the basic metric that’s used to help define ‘fairness’ is, itself, inherently ‘unfair.’

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