We recently outlined a bill introduced by Senator Patty Murray (D-WA), which would expand the EITC and pay for it in part by further limiting the deduction for executive compensation. The Senator believes that the...
- Top Five Percent of Taxpayers Pay Over Half of Total Federal Indivi...
Top Five Percent of Taxpayers Pay Over Half of Total Federal Individual Income Taxes
Special Report No. 83
Executive Summary The latest data from the Internal Revenue Service show that more than half of all federal individual income taxes—50.8 percent—are paid by the five percent of taxpayers who earn the most. In 1996, the latest year for which data are available, this top five percent consisted of 6.0 million earners whose adjusted gross incomes (AGI) were higher than $101,202.
Even among this prosperous group, the highest earners paid the lion's share. The top one percent of earners in the country are paying close to a third of all the taxes collected. That's approximately 1.2 million earners who paid 32.3 percent of 1996's federal individual income taxes.
A time series analysis of the data shows that since 1980 the share of federal individual income taxes borne by the top five percent has increased markedly. In 1980 these individuals paid 36.8 percent of federal individual income taxes, a hefty share but significantly less than their 50.8 percent share in 1996. Naturally, this has resulted in a corresponding decline in the share of the tax burden shouldered by the remaining 95 percent of taxpayers.
The Tax Foundation’s Taxes and Growth Model was used to estimate the long-run effects on the U.S. economy and federal revenue of enacting the capital cost recovery plan developed by Senate Finance...
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