Yes, the rich really do pay their “fair share” of income taxes

[BabyBoomer50s]

Analysis by the Tax Foundation of 2020 tax and revenue statistics recently released by the IRS reveal some interesting findings. Below are from a summary published in today’s WSJ:

- The top 1% of earners paid 42.3% of the country’s income taxes. (a two-decade high in the share of taxes paid by the 1%)

- That same 1% reported earnings of 22.2% of adjusted gross income (AGI) on their tax returns, meaning their share of taxes paid as a group is roughly double their share of income.

- The top 5% of earners reported 38.1% of total AGI but paid 62.7% of all income taxes.

- The bottom 50% of earners reported 10.2% of AGI but paid 2.3% of all income taxes.

- In the aggregate the top 1% in 2020 earned at least about $550,000 and paid an average income-tax rate of 26%.

- Those making more than $220,000 but less than $550,000 paid an average rate of 17.5%.

- For those in the next grouping, above about $150,000, it’s 13.1%. Above $85,000, 9.5%. Above $42,000, 6.5%.

- The bottom 50% of taxpayers, those below about $42,000, paid an average rate of 3.1%.

- The trend over the past two decades is that the income tax burden has been shifting even more to the highest earners. In 2001 the top 1% con-tributed 33.2% of income-tax revenue, nine points lower than in 2020. The TCJA tax reform in 2017 has not changed the trend.

- The next income group, those between the top 1% and the top 5%, have also been picking up more of the bill, 20.4% in 2020 versus 19% in 2001.

- Meanwhile, the share of income taxes paid by lower earners has been going down. The bottom 50% of Americans in 2001 provided 4.9% of the revenue. As of 2020 it was 2.3%. The next income group, those between the top 25% and the bottom 50%, used to contribute 13.5% of the income tax. That has fallen to 9.2%.


It must be noted that these figures are for the income tax only. They don’t include payroll taxes or excise taxes on gasoline and other goods, both of which are less progressive. But income taxes contribute half of all federal revenue (and roughly another third is Social Security and Medicare).

 

[DeluxAuto]

Cool. I'm glad that the "Democrat Elitists" that you all rail about are paying for the social programs that you currently take advantage of.

 

[Fuzzy1975]

Analysis by the Tax Foundation of 2020 tax and revenue statistics recently released by the IRS reveal some interesting findings. Below are from a summary published in today’s WSJ:

- The top 1% of earners paid 42.3% of the country’s income taxes. (a two-decade high in the share of taxes paid by the 1%)

- That same 1% reported earnings of 22.2% of adjusted gross income (AGI) on their tax returns, meaning their share of taxes paid as a group is roughly double their share of income.

- The top 5% of earners reported 38.1% of total AGI but paid 62.7% of all income taxes.

- The bottom 50% of earners reported 10.2% of AGI but paid 2.3% of all income taxes.

- In the aggregate the top 1% in 2020 earned at least about $550,000 and paid an average income-tax rate of 26%.

- Those making more than $220,000 but less than $550,000 paid an average rate of 17.5%.

- For those in the next grouping, above about $150,000, it’s 13.1%. Above $85,000, 9.5%. Above $42,000, 6.5%.

- The bottom 50% of taxpayers, those below about $42,000, paid an average rate of 3.1%.

- The trend over the past two decades is that the income tax burden has been shifting even more to the highest earners. In 2001 the top 1% con-tributed 33.2% of income-tax revenue, nine points lower than in 2020. The TCJA tax reform in 2017 has not changed the trend.

- The next income group, those between the top 1% and the top 5%, have also been picking up more of the bill, 20.4% in 2020 versus 19% in 2001.

- Meanwhile, the share of income taxes paid by lower earners has been going down. The bottom 50% of Americans in 2001 provided 4.9% of the revenue. As of 2020 it was 2.3%. The next income group, those between the top 25% and the bottom 50%, used to contribute 13.5% of the income tax. That has fallen to 9.2%.


It must be noted that these figures are for the income tax only. They don’t include payroll taxes or excise taxes on gasoline and other goods, both of which are less progressive. But income taxes contribute half of all federal revenue (and roughly another third is Social Security and Medicare).

Really? Hmmm I think this spreadsheet gives a bit better idea of who paid what share of taxes, and what share they paid historically....

https://taxfoundation.org/historical-income-tax-rates-brackets/

 

[ll74]

If you're talking about taxes....then the percentage should be based on your income.

 

[BabyBoomer50s]

Really? Hmmm I think this spreadsheet gives a bit better idea of who paid what share of taxes, and what share they paid historically....

https://taxfoundation.org/historical-income-tax-rates-brackets/

https://www.wsj.com/articles/internal-revenue-service-income-taxes-2020-data-84aa19b3

 

[adrina]

So... a think tank made up of wealthy businessmen think the wealthy pay enough in taxes. Even though their wealth increases are at historical highs and the wealth distribution margins are at historical highs.

Okie dokie.

 

[Fuzzy1975]

https://www.wsj.com/articles/internal-revenue-service-income-taxes-2020-data-84aa19b3

lol in the 1950's the rate was 90%, in the early 80's 70%....now it's 26% and you think that is too high??? take your opinion piece and shove it up your ass.....lol

 

[Tayloroc]

Depends on how one defines fairness. “Normal” tax systems (as defined by many tax policy scholars) are progressive. That is, the rate of taxes increases faster than the rate of increase in income. Some say that flat taxes are fairer: income increases and tax increases are the same. The problem with this is that the last dollar(s) of income become increasingly more/less important as income decreases/increases. In English, if I make $10,000 and you make $1,000,000, taxing me and you at the same 10% affects me more than you as most of my income has to be spent just to get by.

Also focusing on AGI ignores the wealth that is excluded or sheltered from taxation, e.g. inheritance or carried interest.

 

[Fuzzy1975]

Depends on how one defines fairness. “Normal” tax systems (as defined by many tax policy scholars) are progressive. That is, the rate of taxes increases faster than the rate of increase in income. Some say that flat taxes are fairer: income increases and tax increases are the same. The problem with this is that the last dollar(s) of income become increasingly more/less important as income decreases/increases. In English, if I make $10,000 and you make $1,000,000, taxing me and you at the same 10% affects me more than you as most of my income has to be spent just to get by.

Also focusing on AGI ignores the wealth that is excluded or sheltered from taxation, e.g. inheritance or carried interest.

^^^^^^

This exactly, I pay in the top income rate in Canada, and my tax burden doesn't affect my life style, I pay more in tax than the average Canadian salary. Which means I can afford to pay that much. But do I like paying that much? Not really, but I like the country I live in, and the area of which I reside fits me like a glove. So why would I move, just to save some dollars to throw on the pile?

 

[Tayloroc]

Justice Holmes had it right: “Taxes are the price we pay for civilization."

 

[IsobelDoc]

It's very easy to sit here and say that the government should force the rich to pay more taxes, but the reality is not quite so straightforward.
The rich are, rich - and that gives them options.
They could, for instance say - no thank you - ill leave the country, take all my manufacturing or whatever jobs their company provides in the country - and go elsewhere.

Even those that dont provide jobs - could simply leave the country - and how much tax would you get from them then?

Having a lot of money means you get to 'negotiate' what you pay in tax.
Is it fair? probably not, but it is the system and the world we live in.

And since we're talking of fair - what about those who havent worked a day in their lives - been given homes, money, food, all provided by the government at the taxpayers expense, without contributing anything at all. I dont think that that is fair either.

(I live in the UK so our tax and social services system is very different from the US)

 

[BabyBoomer50s]

lol in the 1950's the rate was 90%, in the early 80's 70%....now it's 26% and you think that is too high??? take your opinion piece and shove it up your ass.....lol

The data I shared is for 2020 with comparison to 2001. We all understand that marginal tax rates were much higher in the 50s. President Kennedy noted the paradox that those rates did not translate to higher revenues which is why he championed the rate reduction during his administration. There is obviously a debate about where along the curve marginal rates adversely impact tax receipts but that is not the subject or the point of this thread.

The point is that as of 2020, the highest earners generate most of the tax receipts and pay a significantly higher proportion of their income in taxes. It’s not a complaint. It’s an observation.

 

[BabyBoomer50s]

So... a think tank made up of wealthy businessmen think the wealthy pay enough in taxes. Even though their wealth increases are at historical highs and the wealth distribution margins are at historical highs.

Okie dokie.

Source data comes from the IRS.

 

[ll74]

It's very easy to sit here and say that the government should force the rich to pay more taxes, but the reality is not quite so straightforward.
The rich are, rich - and that gives them options.
They could, for instance say - no thank you - ill leave the country, take all my manufacturing or whatever jobs their company provides in the country - and go elsewhere.

Even those that dont provide jobs - could simply leave the country - and how much tax would you get from them then?

Having a lot of money means you get to 'negotiate' what you pay in tax.
Is it fair? probably not, but it is the system and the world we live in.

And since we're talking of fair - what about those who havent worked a day in their lives - been given homes, money, food, all provided by the government at the taxpayers expense, without contributing anything at all. I dont think that that is fair either.

(I live in the UK so our tax and social services system is very different from the US)

So you're saying that because some rich people could participate in extortion, that it's more complicated?

Interesting take.

 

[Fuzzy1975]

The point is that as of 2020, the highest earners generate most of the tax receipts and pay a significantly higher proportion of their income in taxes. It’s not a complaint. It’s an observation.

I am just pointing out, that historically the rich are now paying the lowest share of their income towards the services that taxes pay for, in the country in which they reside. It's not an observation nor a complaint, it is a FACT!

 

[IsobelDoc]

So you're saying that because some rich people could participate in extortion, that it's more complicated?

Interesting take.

exactly that
is it better to take lower percentage of billions - or nothing at all because the rich have left the country?

I am just pointing out, that historically the rich are now paying the lowest share of their income towards the services that taxes pay for, in the country in which they reside. It's not an observation nor a complaint, it is a FACT!

And the rich - could quite reasonably say that they dont use any of the services that the taxes pay for. They have private healtcare- private security - they dont need welfare - everything they get they pay for. So they are paying into a system for little or no return.
Before you bite my head off - i'm not rich - I work In the UK's NHS - work more hours and pay more tax than I should.

 

[ll74]

exactly that
is it better to take lower percentage of billions - or nothing at all because the rich have left the country?

And the rich - could quite reasonably say that they dont use any of the services that the taxes pay for. They have private healtcare- private security - they dont need welfare - everything they get they pay for. So they are paying into a system for little or no return.
Before you bite my head off - i'm not rich - I work In the UK's NHS - work more hours and pay more tax than I should.

You hold the extortionists accountable for their extortion. Because extortion is against the law.

 

[Fuzzy1975]

It's very easy to sit here and say that the government should force the rich to pay more taxes, but the reality is not quite so straightforward.
The rich are, rich - and that gives them options.

Yes it does, in fact I have 54 more options to protect my income than the average Canadian.

They could, for instance say - no thank you - ill leave the country, take all my manufacturing or whatever jobs their company provides in the country - and go elsewhere.

Sure, pack up and leave one of the freest countries in the world to do what? Go live where? Any other country with lower taxation, is not a country most wealthy people would choose to reside.

Even those that dont provide jobs - could simply leave the country - and how much tax would you get from them then?

They never left in the past, and the tax rates were double what they are today...history proves the wealthy live where they prefer, they don't run away just to save a few more dollars....

Having a lot of money means you get to 'negotiate' what you pay in tax.

No, all it means is you take advantage of all the taxes laws, which means you have an accountant. Everyone could do this, but there is a diminishing return on what you pay, to what you save.

Is it fair? probably not, but it is the system and the world we live in.

Nothing in life is fair, so why bring it up.

And since we're talking of fair - what about those who havent worked a day in their lives - been given homes, money, food, all provided by the government at the taxpayers expense, without contributing anything at all. I dont think that that is fair either.

See above, life isn't fair. However history has shown that society functions better when those who can't survive without assistance, are assisted, instead of thrown to the curb.

(I live in the UK so our tax and social services system is very different from the US)

So, I live in Canada, our tax systems is very different from the US and the UK, but that doesn't mean the problems the citizens of all three countries face is different.

 

[adrina]

Source data comes from the IRS.

Apparently the think tank of wealthy businessmen not only misrepresents context but is glaringly tone deaf in an age of stagnating wages paired with astronomical growth of wealth for the rich. And of course the historically high wealth distribution gap - which hasn't been seen for almost 100 years.

Wonder what happened then. Good thing we have the social net programs. Currently at least. Given your druthers - and the wealthy businessmen think tank - those would go away.

It is insanely un-American to believe what is good for big business and the wealthy is good for America. It defies logic and principle.

 

[IsobelDoc]

See above, life isn't fair. However history has shown that society functions better when those who can't survive without assistance, are assisted, instead of thrown to the curb.

I'm not talking about those who CANT survive without assistance, i'm talking of those who CHOOSE not to work and live off the state. I am fully in support of assisting anyone who NEEDS it, just not giving a free ride to freeloaders who could work but choose not to because they get paid anyway.

 

[Tayloroc]

The data I shared is for 2020 with comparison to 2001. We all understand that marginal tax rates were much higher in the 50s. President Kennedy noted the paradox that those rates did not translate to higher revenues which is why he championed the rate reduction during his administration. There is obviously a debate about where along the curve marginal rates adversely impact tax receipts but that is not the subject or the point of this thread.

The point is that as of 2020, the highest earners generate most of the tax receipts and pay a significantly higher proportion of their income in taxes. It’s not a complaint. It’s an observation.

 

[Fuzzy1975]

exactly that
is it better to take lower percentage of billions - or nothing at all because the rich have left the country?

The rich are not leaving, they don't want to live in "shit holes'....*chuckles*

And the rich - could quite reasonably say that they dont use any of the services that the taxes pay for.

HUH? They drive on the roads, drink the water, use the toilet, the list of service rich and poor alike use is long, very long, and everyone pays to maintain them!

They have private healtcare- private security - they dont need welfare - everything they get they pay for. So they are paying into a system for little or no return.

Again, read above, we all use those systems....we all pay to support them...

Before you bite my head off - i'm not rich - I work In the UK's NHS - work more hours and pay more tax than I should.

Ah now the reason comes out, you pay more than you should. By who's standards? Yours?

Don't like paying taxes, why don't you move to some other country where the tax rates are not so high? I'm betting you stay put, just like those wealthy people do.

 

[Fuzzy1975]

I'm not talking about those who CANT survive without assistance, i'm talking of those who CHOOSE not to work and live off the state. I am fully in support of assisting anyone who NEEDS it, just not giving a free ride to freeloaders who could work but choose not to because they get paid anyway.

Who are the freeloaders? What percentage of those on social assistance truly don't want to work? Name them. Don't just throw that line out there, back it up with fact, not your personal feelings.

 

[phrodeau]

We’d all pay less in taxes if we adopted Lauren Boebert’s plan, and stop sending money to foreign countries like Alaska.

https://www.independent.co.uk/news/...auren-boebert-mocked-us-map-b2293179.html?amp

 

[ll74]

I'm not talking about those who CANT survive without assistance, i'm talking of those who CHOOSE not to work and live off the state. I am fully in support of assisting anyone who NEEDS it, just not giving a free ride to freeloaders who could work but choose not to because they get paid anyway.

In your estimation, how many people (percentage) on average is that?

All in all, it sounds like you blame poor people for choosing to be poor while being perfectly fine with rich people extorting them.