Taxes — Do the Rich Pay Their Fair Share?

Inspired by the Washington State Legislature passing a 9.9% income tax on millionaires, Weekly Industry News has been looking at taxes the last few weeks. We’ve delved into the issue from a number of interesting angles.

Our exploration has taken us from Washington’s 9.9% to which have the highest tax rates and the lowest. This week — and this will probably be our last tax story — we examine whether the rich pay their fair share of taxes.

Every year Americans spend over 7 billion hours filing taxes. Laughingly, we also spend just about that much time arguing about them, and who is paying them and who isn’t. That leads us to the rich, and to who pays the most, the rich or the poor.

We start with 2021 statistics from the Internal Revenue Service on income groups and adjusted gross income earned, and the federal taxes paid. In 2021 the middle class — those earning $96,000 to $173,000 a year paid the highest percentage of their income to federal income taxes:

• The bottom 50%, those with income up to $48,700 pays 10% of their income to federal taxes
• The top 25% to 50% earners, people with income from $48,700 to 96,600 pay 18% of their income to federal taxes
• The top 10% to 25% of income earners, those with incomes $96,600 to $173,000 pay 19% of that income to federal taxes
• The top 5% to 10% of income earners, those with incomes of $175,000 to $258,000 pay 11% of that income to the federal government
• The top 2% to 5%, those with incomes of $258,000 to $699,000, pay 16% of all their income to federal income taxes
• The top 1%, those with incomes of $699,000 and up, pay 26% of their total income to federal taxes

Of all taxes paid, this is the share each group pays of all federal income tax income:

• The bottom 50%, those with income up to $48,700 pay 2% of all taxes paid to the U.S. treasury
• The top 25% to 50%, again, those with income $48,700 to 96,600, pay 8% of all taxes paid to the federal government
• The top 10% to 25%, people with incomes $96,600 to $173,000, pay 13% of all federal income taxes
• The top 5% to 10%, those with incomes of $175,000 to $258,000, pay 10% of all taxes paid to the U.S. government
• The top 2% to 5%, individuals with incomes of $258,000 to $699,000, pay 20% of all the taxes paid to the federal government
• The top 1%, people with incomes of $699,000 and up, pay 46% of all taxes paid to the U.S. treasury

The Libertarian publication, Reason contends the rich pay their fair share and says taxing the rich isn’t going to dent the deficit problems. Reason says the top 10% of income earners earn about half the nation’s income and pay around 72% of all federal taxes. The bottom half of earners give about 3%.

The IRS statistics has the most wealthy paying 66% and the lowest earners paying out 2% of their income.

The publication finds the total worth of all American billionaires at around $8 trillion. With a federal deficit projected to rise to $25 trillion in the next decade, taxing the rich isn’t going to dent that deficit — even if you cashed in all of their assets.

Source link: REASON — https://bit.ly/4e2hMzq