# Who pays the most taxes?

I read that the top 50% of income tax payers pay 96 per cent of the taxes (and that he top 1% pays around 30%), and that the poor pay no income taxes. Who is considered poor?

Is this true? How can one verify this?

This graph on this page sheds light on the issue for the top 1% from 1980-1999.

Cecil’s article cited above sheds light on the ironic likelihood of him being banned from GQ due to political drift while addressing a factual question.

Here is a pdf from the IRS site containing a statistical study of income and tax distribution from 1978 through 1996. Page 6 has a graph showing the tax distribution by income group (bottom 50%, top 1%) It largely bears out your statistics. Hope that helps verify.

It’s worth noting that Cato is a very libertarian-leaning organization and so is not an unbiased source. They do have a reputation for doing very good research, though. But I would like to know where they’re getting the raw numbers from.

Here is my favorite chart on this issue. It shows the amount of taxes that each quartile of income earners actually pay, rather than “where the money comes from.” Lookit Table 1, about halfway down.

It illustrates far better than other charts how payroll taxes (like Social Security) hit the poor far, far more than they hit the rich, and how income taxes hit the rich far, far more than they hit the poor. I also like the chart because it puts to rest the nonsense spouted by some that the middle class/upper middle class/wealthy pay more than 50 percent of their income to Uncle Sam.

Table 2 illustrates in a slight different way than previous links “where the money comes from.” Basically, in answer to your question, the top 60% of income earners (generally those making about \$52,000 a year or more) pay about 93 percent of all taxes. The lowest 40% pays about 6% of all taxes, but 14% of payroll taxes.

Within the top 60% figure, the top 20% of earners in the country (with pretax incomes about \$175,000 per year) pay about 64% of all Federal taxes. The richest 1% (with pretax incomes around \$1 million a year) pay about 20% of all Federal taxes.

Not to nitpick, but if you add up federal, state income, sales, local and property taxes, I can easily imagine that it hits well above the 50% for a lot of affluent households.

Maybe a better question is “Who drank the most booze, attended the most entertainment and sporting events, stayed in the best hotels, ate the most meals, drove around in limos and nice cars (including speeding through loopholes) and just generally screwed around having a good time on pre-tax dollars?” Until you can sort out perks and taxes you can’t begin to make an equation on what the real tax rates are.

It is possible is a long way from saying it is common, which is the complaint I’m responding to. Considering that state or sales and property taxes are deductable, and high income earners often have other tax advantages, there’s a reason why the alternative minimum tax is starting to hit middle- to upper-middle income taxpayers.

That’s a good point, but…

…who says this? I think there is a tendancy for some folks to say “taxes” (meaning all taxes) and for the audience to hear “federal income taxes”. If you add up all the taxes a person in the higher tax bracket pays, it can easily approach 50% unless he has some hefty shelters. When Bush took office in 2000, the top federal rate was 39.6%. The top rate in CA was 9.3%. As lates as 1986, the top federal rate alone was 50%.

At any rate, we should all be careful when we talk about “taxes”, and make sure we specify which tax or taxes we are talking about.

Shares of Federal Income tax paid by highest 1% of earners. Look how it goes up! Their share of federal income tax went from 20% to 39% of federal income taxes paid! Lordy the rich ARE getting soaked!

Oh, wait…Table 5 here tells us that the top 1%'s share of total adjusted gross income went from 8% to 20% of all AGI in the same period. So their share of taxes almost doubled, but their share of the goodies of society more than doubled. Makes a big difference in how you view it if you have all the facts.

And this is even ignoring Spartydog’s insight about the better off being better able to work the system.

Correction: the top marginal rate was 39%, meaning that every dollar earned after your first \$300-odd thousand was taxed at that rate. Dollars earned before that were taxed at lower rates. That’s why, if you look at my cite, it shows that the top earners pay about 24% of their income in income taxes, even though they are in the top marginal rate.

John, your last point is well taken, but the fallacy I’m addressing is the very one you’re committing in most of the second paragraph. You can’t take the top marginal tax rates for Federal and state taxes, include the tax rate for payroll taxes, throw in any sales taxes for good measure add them all together,and say “Voila! 50%… no, 60%… hey, it’s 70% tax rates in America!” because the taxes aren’t paid that way.

Yes, there are Americans who pay more than 50% tax, but it is a small number number of income earners. It is not a common occurance. There are those – on this board and elsewhere – who have sought to prove that taxes are even more burdensome than we realize by adding together top marginal rates for various taxes, and I’m simply saying that folks should not fall for that poorly grounded argument which rests solely on faulty math.

Who pays the most taxes?

WAG Anyone who pays more taxes than I do makes too much income.
Anyone who pays no taxes is getting just enough income.

Yes, I know it’s a marginal rate. And while the top rate kicks in at about \$300k today, the 50% rate kicked in at about \$150k in 1986, and the CA top rates kick in at much smaller incomes. For the highest income earners, that means they are paying the top rates for the lion’s share of their income (unless they have hefty tax shelters). Maybe I’m just sensitive about that since I live in CA, where the top rate is high (it used to be 10% just a few years ago), and kicks in at the relatively low income* of about \$40k. If you make \$200k/year (not at all uncommon in Silicon Valley), you’re paying the highest rate on ~80% of your income.

Note that your table only shows the averages for various group, and doesn’t tell us much about individual tax payers. There is going to be a lot of variation within the group.

*low for a top rate to kick in.

Agreed. Especially since most of the wealthy know how to shelter a good portion of their income.

I’m not aware of any. My point is that if you’re going to claim, in a GQ thread, that certain people say “x”, you should quote those people saying “x”, with a link-- especially if you are disparaging the people who allegedly say “x”. But we’re straying into GD territory here…

I thought the OP was going to ask who literally. Of course…it would probably be the richest person (Gates), but then again I believe corporations are also technically people so you’d have to look at them as well.

Federal Income tax is only one form of tax. I find it believable that the wealthiest 50% of americans pay 96% of federal income taxes. But 96% of all taxes? No, I don’t believe it and I’ve heard all income groups pay about the same in taxes.

I am reading parts of the book ‘america, who really pays the taxes’ which is mentioned in the column posted by Shagnasty and that book claims that most incomes pay about the same in total taxes when you factor in all the kinds of taxes. They talked about how Bush sr. paid about the same in taxes as a middle class person.

I, too, am trying to avoid quoting the GD threads that have gone over this, but you make a valid point that I should provide a cite. Here are a couple about politicians who use various flavors of questionable calculations that overstate tax burdens in order to argue for tax cuts.