Daily Facts: Total Taxes Paid As % of Income USA 2011

Given Mitt Romney’s disdain for 47% of Americans as tax moochers and the GOP mysterious “how are they going to pay for it in the proposed Ryan budget”, today’s daily facts looks at who and how much various income groups pay in total US  taxes. But not just the total taxes paid by income group but as a percentage of the each groups total income. So this looks not just at federal income taxes but also state and local taxes paid plus all the miscellaneous taxes [the federal gas tax is one of the biggest]. The data is from the Institute on Taxation and Economy Policy from April 2012 report on the 2011 Taxes Paid.

The data shows that if you are in the poorest 20% , your  income averages $13,000 per year and $2264 or 17.4% of your income goes to paying all the various US taxes. On the other hand, if you are in the top 1% of income you earn an average of $1,371,000 per year and pay 29.0%  of your income [$397,590]  in all the US taxes.     But the top 1%  pay less taxes as percent of total income than the next 4%, 5%, and 10% of income groups.  The bottom line is that middle class, pays the highest % of  their total income in taxes while the lowest total tax burden  is paid by the bottom 40% of income earners.  Below is a profile over time of the various taxes pid in the US.

Total taxes paid as a percentage of income is a much clearer indicator of  where the burden of  total US  taxes lie. Consider for example, that federal income taxes account for only 40% of all taxes paid in the US. Thus the burden of taxation is subject to much manipulation . For example, the Wall Street Journal just omits this critical total taxes as a % of income view of tax data although they use  the same data source.When you read the WSJ  report, the data looks like the burden of taxes paid lies unfairly  on the top income earners [top earners cumulatively have 21% of all income and pay 21.6% of all taxes] but as a percentage of their total income, total taxes for the very wealthy are slightly less than the middle classes.  In sum this figure of total tax burden as a % of income  is a lot more equitable than if you look at the cumulative amount of taxes paid. This leaves unanswered the much more difficult  question of which income group benefits most from all levels of government benefits  for their taxes paid.

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