do millionaires really pay just about all of the taxes?

Question

i hear this on TV and radio all of the time. i am sure that the rich pay a lot of it, but i think that the figures are skewed. When ALL of the taxes are included, i mean, sales tax, ad valorem, social security and medicare withholdings, gasoline tax, car tags, cigarette tax, and all of the rest are included, not just income tax. do the top say, 5% really pay over 50% of the governments total income from taxes?

Answer 1

Yes, this is essentially true...

It is true that the US also allows deductions for specific types of investments and spending, which only happens when you obviously have the money to do it. But that's besides the point since this is a question of who pays the taxes rather than whether it is right or wrong. This is just an objective answer, rather than a political opinion.

The United States has a regressive Federal income tax system, which taxes the richer at progresively higher and higher percentage of their income. Combine that with the fact that the rich make more money in absolute terms (as opposed to percentage), it is true that the rich pay substantially most of the Federal Income Taxes.

http://www.irs.gov/pub/irs-soi/04databk.pdf
(Federal Tax summary, look at page 26 for breakdowns by salary)

You add on top of this that the bottom 40% or so of Americans get a tax refund - so it is a negative tax. As a result, richer Americans pay an even higher percentage.

Now that's Federal. State Taxes come from many sources and will vary from state to state, especially since some states do not have income tax. State income taxes is also regressive, taxing the richer at progressively higher rates. However, states also make a huge amount of their budget on consumption tax (e.g. state tax, car registration, gasoline taxes, et cetera). These tax richer individuals more because they tend to buy more goods and services in absolute terms, but in smaller percentages in percentage terms.

Local taxes is primarily based on property taxes. These are based upon the value of property. The tax rate tends to be a fixed percentage rate. However, richer people tend to have bigger houses - which means they get taxed more.

Taxes also come from legal entities like companies and not-for-profits (who pay 10x more taxes that estates). Are they rich? What about dead people? Are they people? NFP, Corporate and estate also are regressive. Like Federal personal income taxes, they pay higher percentages and higher absolute amounts.

Then you get taxes from Excise taxes (think tariffs). Are goods rich? How do you define that?

Figures are at the IRS, your state comptroller and local offices.

Answer 2

As a percentage of income, I don't know. As a percentage of total $$ paid, yes. Most of the figures you hear are probably refer to federal income taxes. State and local income tax would follow a similar pattern. They pay more sales tax because they have more disposable income. 'Ad valorem' is not a tax per se. It refers to anything based on value. Millionaires tend to own more valuable items.

Answer 3

Not necessarily. Many millionaires create shell corporations and overseas accounts that help get them almost tax free. Also, the more one person makes, the more the percentage of the taxes they pay rises. Every great civilization has done this, and those that shifted the tax burden off of the rich (like the Roman Empire) died quick deaths.

Answer 4

No, millionaires pay proportionately less than middle America because they have many loopholes in the taxing system that protects most of their income from taxes.

Answer 5

If they are smart, no. The middle class pays most of the taxes, and I'm told that's the way it should be, as much as I hate it.

Answer 6

they do pay a lot but the ratio is harder on the middle classes