Tax burden falls heavily on the rich

The United States has the most progressive income tax system in the industrialized world, and the wealthiest 10 percent here pay a greater share of the tax burden than do the wealthiest 10 percent in other nations that are members of the Organization for Economic Cooperation and Development.

That includes nations such as France, Italy and, yes, even Sweden.

In addition, the tax burden here has become more progressive over time, and a rising percentage of Americans pay no income tax at all.

Those were just some of the conclusions of a newly released Tax Foundation study, just in time for April 15. They ought to inform debate about how to fix the nation’s economy and institute long-range deficit reduction. Chances are, though, you’ll still hear the left shouting about making the rich pay their “fair share.”

Look at this chart from the report:

  This illustrates which income levels pay the most. The chart below shows the growing percentage of those who pay no income tax at all.

  The report contains the example of a family of four earning $45,000 who takes advantage of credits and deductions and ends up owing nothing and receiving a nice refund.
The chart below shows that being a millionaire is not necessarily a permanent thing.

  And the next chart demonstrates that the nation doesn’t have a wage gap so much as it has an education gap. The greater your level of education, the more money you make. Perhaps that ought to be more of an emphasis with government spending.

  I don’t have room to include all the charts here. The report itself is worth reading. Just click on this text and go see for yourself. The Tax Foundation is a non-partisan think tank interested in sensible tax policy.
The report’s conclusion is that the nation needs fundamental tax reform in order to restore its competitiveness and put it on the path to growth.
That takes hard work, though. Don’t count on it.

About the Author

Jay Evensen



  1. Ken

    In your first paragraph, you appear to equate “tax burden” with “effective income tax rate.” If you draw a salary or if you have any investments, “tax burden” and “effective income tax rate” are very different things. Using data on income taxes to make a point about tax burden is like using innings pitched to choose the Cy Young award winner while ignoring ERA and WHIP.

    More specifically, most people not in the lower 99% derive much of their income from wages, which are subject to social security and medicare taxes. Given that wages above $113,700 are not subject to social security taxes, people earning above $113,7000/yr in wages pay a lower payroll tax rate than those making less than $113,700/yr in wages. On top of that, most people in the top 1% (esp. the top 0.1%) derive a large portion of their income from capital gains, which are taxed at about 15%, which is a lower tax rate than all other tax brackets than the lowest 2 brackets (<$33,950 single/<$67,900 married).

    And all of this neglects the effect of specialized tax credits, incentives, and rulings that vastly favor the 1%. For instance, hedge-fund managers somehow manage to treat their salaries as capital gains even though it is a fee paid by their clients for them to do their job. This means they pay no income tax – just capital gains taxes at 15%.

    Also, remember that this entire discussion categorizes taxpayers by their income, not their net worth. You could have a tremendous net worth, yet draw a relatively small income from your investments and reinvest (often tax free) in those investments. You can then grow your net worth while not appearing as wealthy if you base wealth on income, not net worth.
