“The rich don’t pay their fair share in taxes.”
In the wake of Joe Biden’s pardon of his son Hunter despite multiple pledges to the contrary, that slogan maintains the same validity as Biden’s frequent reference to “my word as a Biden.” The primary distinction between them is that the public fully realizes the falsity of the latter, but not as much the former.
Greater familiarity with Internal Revenue Service (IRS) data for the most recent tax year, however, would rectify that disparity.
Stated simply, the official government data refutes the stubbornly persistent popular myth perpetuated by the media and class-warfare politicians who seek higher taxes.
For the year 2022, the most recent year available for IRS analysis, the numbers will astonish those familiar with the popular sloganeering but unfamiliar with the facts.
The top 1%, with incomes above $663,164, earned 22.4% of the nation’s total income in 2022. But here’s the kicker: That same top 1% paid 40.4% of the nation’s total income taxes. Isn’t that more than its “fair share?”
Moving on to the top 5%, with incomes between $261,591 and $663,163, they earned 38.3% of the nation’s income, but paid fully 61.0% of the nation’s income taxes. Accordingly, well over half of the income taxes collected by the federal government comes from just the top 5%. “Fair share?”
Expanding our analysis to the top 10%, with incomes between $178,611 and $261,162, they earned 49.4% of the nation’s overall income, but once again paid an outsized portion of the nation’s income taxes at 72.0%. When that top 10% doesn’t earn half of U.S. income yet accounts for nearly three-quarters of its total income taxes, the “rich don’t pay their fair share” propaganda becomes farcical.
The top 25% of U.S. income earners, whose salaries range from $99,857 to $178,610, earned 69.9% of America’s overall income, but paid 87.2% of our total income tax share.
Moving down to the top half of income earners in America, with incomes between $50,339 and $99,856, they earned 88.5% of U.S. total income while paying 97.0% of U.S. income taxes.
That leaves us with the bottom 50%, which includes those with incomes of $50,338 and under. While they earned 11.5% of the nation’s income, they account for just 3.0% of the nation’s income taxes paid. While nobody seeks to penalize those of lower means, the simple mathematical fact is that their income share is nearly four times their income taxes paid share.
Moreover, this steep progressivity continues a long-term trend over recent decades, as noted by the Tax Foundation:
The share of income taxes paid by the top 1 percent increased from 33.2 percent in 2001 to 40.4 percent in 2022. While the share has generally been increasing over the period, 2020 and 2021 are outlier years largely because of significant changes in income and tax policy during the coronavirus pandemic. Over the same period, the share of income taxes paid by the bottom 50 percent of taxpayers fell from 4.9 percent in 2001 to 3 percent in 2022.
Furthermore, it’s simply not true that wealthier Americans somehow pay lower average income tax rates.
The top 1% pays an average income tax rate of 26.1%, while the top 5% pays an average rate of 18.8%. The income bracket between the top 5% and top 10% pays an average rate of 14.3%, and the 10% to 25% bracket pays an average rate of 10.7%. The 25% to 50% income bracket pays an average income tax rate of 7.7%, and the bottom half, whatever Joe Biden’s ramblings, pays an average rate of 3.7%.
As the 2017 Trump tax cuts that benefitted Americans drift toward expiration in 2025, it’s important that Congress prioritize their extension. In that endeavor, a sober understanding that the class-warfare rhetoric opposing the effort is false can help.
