Is there a more trite and hackneyed phrase in the tax debate than “fair share”? Progressives, who have a never-ending appetite for spending other people’s money, rarely get specific when they argue for higher levies on the “rich.”
Neither “rich” nor “fair share” is ever defined. Is it “fair” for the federal government to confiscate 90% of your earnings? Fifty percent? A quarter?
Monday was the deadline for most Americans to file their federal income tax returns. In 2023, Washington collected $2.33 trillion in income taxes, which accounted for 48.5% of all revenue. You may not know it from the rhetoric repeated by Democratic rabble-rousers, but the vast majority of that money comes from those who might be described as rich and well-off.
According to IRS data from 2021, the top 1% of earners — those who made more than $682,000 — paid 45.8% of all federal income taxes. The top 10% — men and women who bring home more than $170,000 — contributed 76% of Washington’s take. As for the very wealthy, the Pew Research Center found that, in 2021, taxpayers with an adjusted gross income of at least $10 million made up only 0.02% of filers yet paid 12.6% of all income taxes.
Meanwhile, the bottom 50% generated just 2.3% of income tax revenue, and many in the lower half pay no income taxes at all. “Because of the system of tax benefits and transfers, such as taxpayer-funded programs like Medicaid and public housing assistance,” CBS reported last year, “the lowest-earning Americans actually receive more from the government than they pay in income taxes, according to a recent analysis of tax data from the Tax Foundation.”
In fact, the federal income tax system is far more progressive than many revenue sources commonly used by states and local governments. The sales tax, for instance, hits low-income consumers much harder in the pocketbook.
Yet that doesn’t stop public agencies from routinely seeking small increases in the levy added to the cost of most consumer goods.
When all taxes are taken into account — state, local and federal — the average American must toil until April 18 this year to meet the nation’s total tax obligation, the Tax Foundation calculates. New York has the highest overall tax burden of any state in the nation at more than 12%, the foundation reports.
The federal income tax has evolved into a complicated mess of deductions, loopholes, wealth transfers and arcanery. Blame Congress for that. But despite the shrill voices on the left, it also remains a highly progressive source of income for the federal government.
— From Tribune News Service
