Yeah, Yeah, we know: “The richest one percent of Americans pay little or NO federal taxes. And those evil corporations don’t pay taxes at all.” That’s the story bandied around by the Left for decades. Democrats, during election season, consider that talking point to be their “go-to” to diminish their GOP opponents. Then, if and when they are elected to office, they double-down with it to justify raising BIG taxes by demonizing “the Rich.”
There’s one problem: It ain’t true!
In fact, the much-maligned minority, the richest percent of Americans, pays 39.5% of all Federal Income Tax. That is one of the most eye-catching figures in a study released by the Tax Foundation earlier this month. To put that percentage in absolute figures: the richest percent of American taxpayers pay $542.64 billion of a total take of Federal Income Tax of $1.37 trillion.
We’re talking about just the top one percent of American taxpayers!
This data visualization clearly shows that the top one percent pay much more than taxpayers of any other income level.
- It is almost double as much as the next bracket of top incomes: those earning the 2% to 5% of the highest wages in America pay 20.5% of all Federal Income Tax. Or in absolute terms: $281.51 billion.
- It is also almost four times as much as those whose incomes range from the top 6% to 10%. They pay 10.9% of Federal Income Tax, or $149.97 billion.
- Those who earn between the top 10% to 25% of wages in America are a much larger group. Yet, their collective input into the Federal Income Tax is only half as much again as the previous band: 15.9% (i.e., $281.55 billion).
- Those with an income anywhere between the top 25% and 50% only pay 10.5% of all Federal Income Tax, no more than $143.95 billion.
- The entire bottom half of wage earners pay only 2.8% of their income in taxes into the federal coffers. In actual money terms: $37.74 billion. That is more than 14 times less than the top 1%, even though this group is 50 times as numerous.
These figures show the level of contribution to total income tax revenues by the various income levels. The Tax Foundation also provided figures for what that means for individual taxpayers in each group.
- The effective average tax rate for the richest one percent is 27.2%, meaning that well over a quarter of their income goes into federal coffers.
- For the next group (up to 5%), the fiscal pressure is just below a quarter: 23.6%.
- Taxpayers with incomes in the top 10% part with just over one-fifth (21.3%) of their earnings.
- Those in the top 25% bracket contribute 17.8% of their annual income.
- Even those up to the 50th percentile on average still give 15.5% of their annual income to Uncle Sam.
- Because about 45% of American households make too little to pay any Federal Income Tax, the average percentage for the bottom half of incomes is dramatically lower – the average Federal Income tax level for this group is just 3.5%.
Nobody likes paying taxes, and all taxpayers agree that everyone who contributes to the national purse should have some say in how the government raises and spends its money. But in this debate, whose voice should be louder: that of the majority at the bottom of the income scale (who contributes the least) or of the minority of biggest contributors (who fork out the most)? Simply put, that question is the foundation of all politics in a capitalist democracy like ours.
How Do Americans Feel About the Rich and the Tax Burden of the Wealthy?
New Yorkers from Rep. Alexandria Ocasio-Cortez’s district overwhelmingly say the wealthiest people in America pay among the lowest tax rates in the country, which is not supported by data.
“We’re paying too much taxes,” a woman named Lavasquez said to one reporter. “The lower and middle classes, we’re working our butts off, and we’re paying so much taxes, and then you’ve got the upper class, and they’re not paying anything.”
“It’s totally unfair,” said Richard, who works in data analytics. “The bottom percentile of individuals are probably paying the bulk of the taxes whereas you have millionaires and billionaires being able to avoid their share.”
The wealthiest people are “definitely paying the bare minimum if any,” he continued. “I would assume it’s about five percent if that.”
Last week, House Democrats unveiled a proposal to raise taxes on the top sliver of U.S. households. The proposal is part of a sweeping plan to overhaul the nation’s tax code to fund President Biden‘s $3.5 trillion spending bill that includes family and climate change initiatives.
Under the plan released by the House Ways and Means Committee, the top individual income rate would climb to 39.6% for the wealthiest individuals and families. The proposal rolls back a key part of Republicans’ 2017 tax overhaul, which lowered the top individual income rate to 37%.
“I don’t think rich people pay enough taxes,” an audio-visual engineer from New York’s 14th Congressional District said. “They make way too much to get away with making so little.”
A man named Calvin said this: “It basically depends on who you know. There’s a reason why shell companies exist. That’s how you evade taxes.”
One man, Manny, said he thought taxes across the board were “too high” already. He was sure the wealthy “pay their fair share.”
“They should be paying the same amount of taxes as the middle, and lower class are,” Lavasquez said. “That way, it gives us equal share, and no one is feeling singled out.”
Richard said: “If I’m paying a third of my income to taxes, why not the same be applied to millionaires and billionaires? If that’s not fair, then what is?”
Another man said: “It’s not fair to ask them to pay much more than everyone else. I wouldn’t ask for something crazy like half of your money … keep it under 20%, and it would be good.”
According to a Congressional Budget Office report, the top 1% of earners paid an average federal tax rate of 32% in 2017. Tax rates that year declined with income, with the poorest 20% paying an average tax rate of 1%. The Tax Policy Center found similar results.
In 2018, the top 1% of income earners — those who earned more than $540,000 — earned 21% of all U.S. income while paying 40% of all federal income taxes, according to a Tax Foundation analysis. The group paid more in income taxes, about $615 billion, than the bottom 90% of taxpayers combined, or $440 billion.
The data showed that the top 10% earned 48% of the income and paid 71% of federal income taxes.
The share of taxes shouldered by the nation’s richest individuals has climbed over time.
In 2001, for example, the top 1% accounted for 33.2% of the nation’s individual income taxes, according to the Tax Foundation. From 2001 to 2018, the share paid by the bottom 50% of taxpayers fell to 3% from 4.9%.
Unfortunately, Democrats and their incessant concentration on spreading false news about taxes paid by the wealthy have tricked millions of Americans sufficient to foment anger and hatred for the wealthiest of Americans. There is NO doubt these folks make much money. Some certainly inherited it, while others have worked their way to the top of corporations. In contrast, still others have pursued the American Dream, started companies, worked hard to establish them, and are now reaping the fruits of their investments and labor. But isn’t that what the Constitution offers everyone: “Equal Opportunity?”
There was a recent time in which an atmosphere of freedom in the pursuit of happiness in the nation was not only allowed but encouraged. The nation saw a true entrepreneur in the Oval Office: Donald Trump. Sure, some point to his father giving him a six-figure stake to get his entrepreneurial career started. Those same folks wag their fingers at him because he was not “self-made.” But what they forget is that he turned that one million into billions! That doesn’t happen in countries where U.S. freedoms are non-existent.
Raising taxes does two things and two things only: one, it stifles economic growth — PERIOD. Those “one-percenters” who the Leftists hate decide to stop investing and growing their companies because of the stifling tax liability stop growing their companies! Doing that means that those company revenues begin to flatten or tail off, which means “less money.” Less money means no expansion, which means no new jobs, fewer (if any at all) pay raises for employees, perks for staff disappear, and advancement within their company is no longer available. Secondly, corporate layoffs occur when company revenue slides. Corporations then cut expenses. How? Company layoffs, wage reductions, office closings, etc. That always drives unemployment up, wages down.
What Democrats hate to admit is with federal tax cuts, the exact opposite occurs! They demonized Trump’s 2017 tax cut program that cut taxes on virtually EVERY American. The economic and labor statistics prove what that tax cuts instigated. Besides dramatic improvements across the board, Democrats gnashed their teeth when the thought of any Trump success was mentioned.
So why the problem with the Left? Aren’t they happy when every American see improvements in almost every area of their lives? Answer: No, because all the new revenue coming to the government through federal taxes is happening because of the efforts of a Republican.
Just watch as this Congress — controlled totally by Democrats — struggles to sell the American people the need for massive additional federal spending. And to accomplish that, what is mandatory? More Money. And where does that originate? Federal taxes. And who pays those taxes? The American people.
A short note to Joe Biden, Nancy Pelosi, and Chuck Schumer: Americans no longer buy that totalitarian talking point if they ever did. In fact, instead of Pelosi’s $3.5 trillion spending bill with massive new taxes enacted to fund her pork giveaways, why not LOWER taxes again and take us back to the economic miracles we experienced under Donald Trump!
Hold your breath waiting for a Democrat in leadership to agree that needs to happen.