Do the Rich Pay Their Fair Share of Tax?

Entrepreneur & Author

JeffCorbett.com

“It’s almost tax season in the United States.”  

——-

Tax Day in the United States is quickly approaching, and it is always an inauspicious date. 

Every April 15th, millions of otherwise upbeat and proactive citizens wait until the very last minute before submitting to the inevitable long arm of the taxman.  Entire cottage industries of tax attorneys and Certified Public Accountants owe their very existence to this date.

Politics aside, I would like to ask one specific question.  Since we keep hearing from US politicians in Washington DC – that “the rich must pay their fair share,” what exactly is that number?  Pretty simple question, right?  Why then does no one ever want to answer it and give an exact figure?  Perhaps it is because the answer does not fit their narrative. Of course, the next logical question would be what do the wealthy pay now?  What percentage of the national tax do they pay?  It is a simple question to research, and the answer may surprise most. To that end, we offer the sources and quotes below:

Taxfoundation.org:

Typically, the Internal Revenue Service (IRS) releases detailed tax data with a lag of one to two years. Therefore, the most recent complete data pertains to the 2022 tax year. In 2022, individuals in the top 1% of earners – those with adjusted gross incomes (AGI) exceeding $663,164 – accounted for 22.4% of total AGI and contributed 40.4% of all federal individual income taxes.

In 2020, taxpayers filed 157.5 million tax returns, reported earning nearly $12.5 trillion in adjusted gross income (AGI), and paid $1.7 trillion in individual income taxes.

The average income tax rate in 2020 was 13.6 percent. The top 1 percent of taxpayers paid a 25.99 percent average rate, more than eight times higher than the 3.1 percent average rate paid by the bottom half of taxpayers.

The top 1 percent’s income share rose from 20.1 percent in 2019 to 22.2 percent in 2020 and its share of federal income taxes paid rose from 38.8 percent to 42.3 percent.

The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent.

Please Click Here

Forbes:

Going back as far as 2015 Forbes Magazine offered similar data. “The top One Percent in America earns at least $480,930 per year, according to IRS data that compiled earnings/taxes paid from 2015. While that One Percent of Americans makes about 20% of all dollars earned in America, they pay 39% of all taxes paid to the American government.”

Please Click Here

The difficulty is that you will also see article after article on how the wealthy are tax cheats and hide their money from tax collection.  Obviously, they have access to the best accountants and tax attorneys to avoid tax (legal).  Plus, the assertion of being super wealthy at $400,000 per year in New York, Florida or California is doubtful.

Nevertheless, the claims of fraud get pretty thin when pointing to specifically to tax evasion (illegal).  We just do not see proof of this on a massive scale, hard data points in the opposite direction and when it does occur seems to be a one-off.  Why then is it a political talking point?  A logical conclusion (and one we offer) is that the rich are an easy target for political gain.  The irony (or hypocrisy) of this rhetoric is that most national politicians seem to easily fall into that demonic one percent – even on a government salary.

Now, how does that happen?



me

About The Publisher

Jeff Corbett
As entrepreneur, author and magazine publisher with over 25 years’ experience in the global marketplace, I enjoy writing as an advocate for international business and personal freedoms. Thanks to my experiences building businesses I also have a tremendous interest in reading or writing about motivation and self-discipline.