The Wealthy Pay All of the Taxes? Humbug!

As the rich get richer, the poor get poorer. So, who pays all the taxes?

A recent report from CNBC says that “when it comes to individual income taxes, the top 40 percent of wage earners in America pay 106 percent of the taxes. The bottom 40 percent … pay negative 9 percent.” These figures were calculated by the Congressional Budget Office using data from 2010 and released in a report on federal income tax distribution among U.S. households.

CNBC further explains:

How does someone pay negative taxes? The CBO’s formula offsets whatever taxes are paid with “refundable tax credits.” Some of these are due to “government transfers” of money back to the taxpayer in the form of Social Security and food stamps.

From this data, it’s fair to assume that the rich carry the tax burden, while it’s smooth sailing for the lower-wage earners.

But what about all of the other taxes collected by the government?

“Rich people do pay a lot more taxes than poor people, both in absolute terms and as a percentage of income. But the rich are not paying all the taxes. And looking just at the federal personal income tax and trying to draw conclusions about who pays taxes will lead you to wrong answers,” says Josh Barro of Business Insider.

All wage earners must pay a number of other taxes. Barro notes that payroll tax (for Social Security and Medicare), state income tax, sales tax, property tax and excise taxes should not be excluded from the equation. The poorest 20 percent of households, which generate only $11,000 of annual income on average, pay 13 percent of their total incomes in taxes.

Other highlights from Business Insider’s report include:

  • The wealthiest 1 percent pay 43 percent of their total incomes in taxes.
  • The middle quintile of earners pays 25 percent of total income in taxes.

How do you feel about the distribution of taxes? Is the tax code truly progressive? Comment below or on our Facebook page.

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Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Mary Roa

    If I were able to afford to pay 43 percent of my income in taxes I would be tickle pink because those folks have more money than they need. I don’t mind paying taxes and appreciate many (though not all) the benefits of those taxes. But, when you are paying 25 percent there is a good chance that you are still very pinched financially because you didn’t start out with more than you needed in the first place. Curious as to what you think about a flat tax that exempted those below the poverty level? Ten percent across the board would not hurt anyone, but would it be enough to meet budget needs if all tax exemptions were removed?

  • transmitterguy

    The headline should say : “The wealthy spend all our tax money” on wealthy business and their own projects.

  • Bob K

    The average worker salary in the US has not risen since the early 1980s (by design). It is still in the mid 20s. We need a minimum wage at ~$12/hr tied to inflation. I am all for capitalism, we just need to share the wealth. We do not need companies like walmart, where executives and stock holders do well at the expense of the poorest paid employees.

  • Bob K

    From George Washington to Reagan, worker productivity and incomes increased comparably. While productivity (and corporate profits) have risen since Reagan, by design incomes have not kept pace for the first time. Average worker salaries are nearly the same as they were in the early 80s. If workers were paid a fair wage that had kept even with productivity, they would be paying more taxes (minimum wage at least $12 hour tied to inflation).

  • myponderings

    It think it might help to eliminate ALL tax deductions. Businesses could keep paying payroll taxes. In addition, they could pay a small flat tax of 1 or 2 percent of GROSS receipts which would be part of the cost of doing business with no exceptions or exemptions, including oil companies, etc. Businesses would have the advantage of always knowing what percentage of their receipts would go to taxes. Would this be a perfect system? Probably not. Nothing is perfect. Would it be fair? I think so. Equal percentages would be paid by all. Hopefully, those of good will and compassion would share with others according to their means and their beliefs. Or, income tax could be tied to some degree to a percentage of or over poverty level. Wouldn’t it be interesting to calculate the impact to total tax due and collected? I’m not claiming to have the answers. These are just my ponderings.