The truth about income distribution and taxes paid in the U.S.?

Question

Focus on who makes how much by income strata or class, what taxes are paid and do top wage-earners (households) pay their fair share of taxes?

Answer 1

Ignore the rants that the rich don't pay taxes. If you look at the statistics compiled by the IRS every single year, you will see that the "rich" pay more than their fair share of taxes. If you look at the most recent statistics available (2004) on the IRS website under "Tax Statistics", you will find that based on the income distribution of the number of returns filed in that year and the individual income taxes collected by the IRS for that year, you will see that the top 0.02% of income earners in the country (this is tax returns that reported adjust gross income in excess of $5 million for the year), they paid almost 10% of the taxes collected by the IRS for individual income taxes. In fact, the top 5% of incomes in the country paid over 50% of the individual income taxed collected.

The days of the "millionaires paying zero taxes due to write-offs and deductions" are long gone. Almost all the write-off loopholes went away with the Income Tax Act of 1986, when the top tax rates were substantially reduced, but the alternative minimum tax was created, and many abusive tax loopholes were closed.

If you consider child tax credit, the standard deduction, exemptions, and the earned income credit, as well as the progressive tax rates we have, a family can earn quite a bit of money and yet still owe zero tax. Do the calculations yourself. If you have a married couple with two kids that qualify for the child tax credit, they can earn $40,000 a year and still pay zero for federal income tax, and this is even without considering the earned income credit. And this is just from claiming the standard deduction and exemptions for 4 people. The tax liability is under $1,700 and the $2,000 child tax credit wipes that out.

Answer 2

Bottom line the top wage earners pay significantly more than their fair share (I'm not one of them!!).They pay more taxes just by virtue of making more, but then get zapped even more by having a tax rate that is 2 to 3 times higher than folks w lower wages. They also pay more based on a general tax like sales tax since they will generally purchase more goods.

Combine that w the fact most top wage earners utilize fewer of the services that government provides thru payment of those taxes. One example is many top earners choose to put their children in private school, but still pay the same tax as others whose children attend public schools. They usually have health insurance & don't rely on govt to provide that service.

Lower wage earners have a lower tax rate & often receive more refunded by the govt than was actually paid in (at very low level) In addition lower wage earners are most likely to need assistance like govt housing & food stamps.

It's a system that has some inequities for both ends of the spectrum, but it's what we have right now.

Late edit for De Bossy My best friend is a physician. He earns $300K per year & pays about $125K in taxes. There are no specialists to keep the "rich" from paying!!

Answer 3

I made a chart to address your question (I was curious). The data was taken from here:

Income Limits for Each Fifth and Top 5 Percent of Households
All Races: 1967 to 2005:
http://www.census.gov/hhes/www/income/histinc/h01ar.html

I put the chart here:
http://fuelefficiency.org/incomegap.html

I only addressed the issue of income distribution (not taxes). I tried to prove the income gap is getting larger and larger in this country. After getting the data into a spread sheet, i divided the highest income (right column) by the middle-class (third column) income to obtain a wage-gap ratio dating back to 1967. This ratio is highlighted in bold. The chart at the bottom is a visual representation of the income gap in this country getting wider and wider as the middle class is disappearing.

Answer 4

Of course they pay their fair share.

In America, if you choose to have lots of kids and not become educated, you get uber tax breaks and perks from the government.

Families making under $40,000 make thousands of dollars more a year than a single person making $40,000.

All taxpayers pay the share for people who made the decision to have kids.

And a proven fact is that if you tax people with higher incomes more they will make less money to keep from paying the taxes on it.

Answer 5

median income for a family of four is about 35-40 thousand a year. since those above that are above average earners, and the top five percent over-all earn over 75% of the total income, who's gonna pay the most? it ain't the 5% at the top, but the 95% at the bottom. that is, the whole tax saystem is supported by only 25% of the total income. the rest of the total income (75%) is for those who can afford the specialists to keep them from paying any taxes at all. that's why they stay rich.

Answer 6

The top 5% pay 50% of the taxes in the country.

The top 50% pay 94% of the taxes in this country.

The rich pay way more than their fair share.