The Tax Burden of the Top 1%

When discussing the distribution of income and the corresponding tax contributions, it becomes evident that the top 1% of income earners play a significant role in funding the nation's budget. According to recent data from the IRS, the top 1% of income earners account for 21% of the overall income but shoulder a hefty 40% of the total income taxes paid.

2020 Data Analysis

In 2020, the distribution of income and taxes was as follows:

The top 0.1% of income earners earned 22.2% of the total income and collectively paid 42.3% of all federal income taxes. The top 1% on average had an adjusted gross income (AGI) of $24.2 trillion and paid $615.7 billion in federal income taxes, resulting in an average tax rate of 25.44%. The bottom 50% of income earners, in contrast, collectively paid just 3.4% of the total taxes.

Tax Rates Overview

The federal income tax rates for 2022–2023, after deductions for standard or itemized, and dependents, are as follows:

Tax rate Taxable income bracket Tax owed 10% 0 to $10,275 10% of taxable income 12% $10,276 to $41,775 $1,027.50 plus 12% of the amount over $10,275 22% $41,776 to $89,075 $4,807.50 plus 22% of the amount over $41,775 24% $89,076 to $170,050 $15,213.50 plus 24% of the amount over $89,075 32% $170,051 to $215,950 $34,647.50 plus 32% of the amount over $170,050 35% $215,951 to $539,900 $49,335.50 plus 35% of the amount over $215,950 37% $539,901 or more $162,718 plus 37% of the amount over $539,900

It's worth noting that married filing jointly tend to have a lower tax burden, while those filing separately generally pay more.

Historical Data: The Case of Donald Trump

Apart from the general income tax data, individual data provides valuable insights into the tax practices of the super-wealthy. For example, during his 2005 tax year, the former U.S. President Donald Trump reported paying a relatively low amount of taxes. A search reveals that Trump paid a paltry 3.1% of his income in federal taxes, which led to heated controversies and debates about the tax system's fairness.

Such data highlights the need for a transparent and equitable tax system, where the financial contributions of all income brackets reflect their actual income contributions.