Report: Wealthy Americans Do Pay ‘Fair Share’ of Taxes
With the income tax filing deadline rolling by in mid-April, the Tax Foundation’s website offered a report refuting allegations from the left that wealthy Americans need to pay more of a “fair share” of taxes.
“Support is growing in Washington and among the public to raise tax rates on the ‘rich’ to reduce inequality in America,” the Tax Foundation stated.
“But much of the perceived rise in inequality is really the natural result of the business cycle as well as social and demographic forces far beyond the role of tax policy.”
Income tax returns showing an adjusted gross income of $250,000 or more account for only about 2 percent of all returns, according to the report, which was published last year and is largely based on figures from 2010.
These filers’ share of all income is 23 percent, but they account for 53 percent of all income taxes paid. Those earning less than $30,000 account for 23 percent of all income, but as a group they receive more back from the IRS than they pay in income taxes.
The top-earning 10 percent of taxpayers pay 70 percent of all income taxes, up from 55 percent in 1985, while the bottom 90 percent pay 29 percent, down from 45 percent in 1985. In fact, the top 1 percent pay more, 37 percent, than the bottom 90 percent.
The percentage of filers who pay no income taxes has soared from 16 percent in 1969 to 41 percent — 58 million filers in 2010.
The Tax Foundation report shows how a family of four earning as much as $45,000 could pay no income taxes. After taking into consideration the standard deduction, four personal exemptions, child credits, and the earned income tax credit, the family would not only escape paying income taxes, but they would receive a refundable credit of $637.
As for assertions that those not paying income taxes do at least pay Social Security payroll taxes (FICA), 23 percent of non-payers actually receive more in refundable credits than they pay in FICA.
The Tax Foundation concludes: “Thanks to misdirected tax policy, America is becoming divided between a shrinking group of taxpayers who are bearing the lion’s share of the cost of government today, and a growing group of taxpayers who are disconnected from the basic cost of government.
“This is a recipe for both fiscal and social instability.”
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