Who Pays the Most Taxes?

Posted by Dave Dunn on August 7, 2008 | 0 Comments

Tags: Accounting

Everyone knows that the more one earns, the more they pay in taxes - both in dollars and on a percentage basis. However, most people will probably be surprised to find out just how much of the total taxes collected the top earners contribute. Here's a breakdown:

• top 1% of earners: account for 39.9% of all federal income taxes
• top 5% of earners: account for 60.1% of all federal income taxes
• top 10% of all earners: account for 70.8% of all federal income taxes
• top 50% of all earners: account for 97% of all federal income taxes.

Obviously, to contribute this high a percent of total taxes collected, top earners must be making a lot more than every one else. Here's what it takes to be a top earner:

• top 1% of earners: earned $388,800 or more (this group accounted for 22% of all adjusted gross income reported on returns)
• top 5% of earners: earned $153,500 or more (this group accounted for 37% of all AGI)
• top 10% of all earners: earned $108,900 or more (this group accounted for 71% of all AGI)

Based on this, it is easy to see that changes to the tax rates paid by top earners have a much greater impact on total taxes collected than changes to the tax rates paid by the lower 50% of earners.