What Is a ‘Fair Share’ in Taxes?

By Dominic Pino

Thursday, December 05, 2024

 

Politicians like to say that the rich don’t pay their “fair share” in taxes. The Tax Foundation ran the numbers for the federal individual income tax on new IRS data from tax year 2022. Here’s what it found:

 

·         The bottom 50 percent of taxpayers, those making below $50,399, pay an average tax rate of 3.7 percent (and that’s an overstatement because these figures do not include the refundable tax credits that many lower-income households receive). The top 1 percent of taxpayers, anyone making $663,164 or more, pay an average tax rate of 26.1 percent.

 

·         The bottom 50 percent of taxpayers made 11.5 percent of the country’s total adjusted gross income and paid 3 percent of federal individual income taxes. The top 1 percent made 22.4 percent of the income and paid 40.4 percent of the taxes.

 

·         In 2001, the top 1 percent paid 33.2 percent of federal individual income taxes, meaning their proportion of the tax burden has increased by 22 percent since then.

 

·         In 2001, the bottom 50 percent paid 4.9 percent of federal individual income taxes, meaning their proportion of the tax burden has fallen by 39 percent since then.

 

·         In absolute terms, the top 1 percent paid $864 billion in federal individual income taxes in 2022, and the bottom 90 percent paid $599 billion.

 

When politicians prattle on about the rich’s “fair share,” ask what that would look like compared with the extremely progressive income tax the U.S. already has.