The Obama Administration yesterday backed down from its plan to tax the earnings on 529 savings accounts, a kind of saving account for higher education under section 529 of the tax code. At Bloomberg, Richard Rubin and...
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New Data on Share of Federal Income Taxes Paid by Top 1%, Top 5%...
Per the release of income tax data by AGI percentile yesterday by the IRS, the Tax Foundation has updated its popular "Summary of Federal Individual Income Taxes" page. The data recently released is for tax year 2005 (same as calendar year).
The report highlights the fact that both the tax share and AGI share of the top 1 percent reached all-time highs in 2005. In 2005, the top 1 percent of tax returns earned 21.2 percent of adjusted gross income and paid 39.4 percent of the nation's federal individual income taxes. This indicates that the federal individual income tax is highly progressive as under a purely proportional system, the two shares would be identical.
Furthermore, in 2005, the top 1 percent of tax returns paid nearly the same amount in federal individual income taxes as the bottom 95 percent of tax returns, a group which was responsible for 40.4 percent of the federal individual income taxes paid.
(Note: This data does not include the refundable portions of the child tax credit or the Earned Income Tax Credit, which if included, would make the share of taxes paid by the top 1 percent even greater as those items would significantly lower the tax bill of the bottom income groups.)
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