Who Pays Federal Income Taxes? - Driven By Braman Motorcars
Bottom Line: Today is Tax Day for most of the country (though not for Florida and residents of four other states who’ve been granted disaster exemptions to file until May 1st). As the tax season winds down who’s paying income taxes? Based on the most recent study by the National Taxpayers Union Foundation using IRS data...
Here's the breakout based on the percentage of total federal income taxes paid by income bracket:
- Top 1%: earned 22% of all income; paid 40% of all taxes
- Top 5%: earned 38% of all income; paid 61% of all taxes
- Top 10%: earned 49% of all income; paid 72% of all taxes
- Top 25%: earned 70% of all income; paid 87% of all taxes
- Top 50%: earned 88% of all income; paid 97% of all taxes
- Bottom 50% earned 12% of all income; paid 3% of all taxes
And that necessarily means only 3% of the federal tax burden was paid for by the bottom half of income earners and 47% of Americans have had no federal income tax liability. Clearly the federal tax burden lies squarely with upper income earners both literally and relatively. This is especially instructive as the Trump tax policy, which let’s not forget – this is, is front and center in the congressional budget deliberations currently for consideration in what President Trump hopes will be his Big Beautiful Bill. Additionally, President Trump is looking to add his promised no tax on tips or on overtime, which likely would further reduce the tax liability on middle- and lower-income taxpayers.
As always there are two sides to stories and one side to facts. The fact of the matter is that the narrative of Trump’s tax cuts being aimed at millionaires and billionaires couldn’t be further from the truth. Quite to the contrary, it’s demonstrable that upper income fare worst under President Trump’s tax policy with effectively half of the country having little or no federal income tax liability with more on the way if the president has it his way with the expansion of tax exemptions for tips and overtime.