What Taxes Do Americans Pay?

July 30, 2009

The Tax Foundation has released its annual update of IRS data regarding how much federal individual income taxes different income groups remit to the IRS. The data show that the federal individual income tax is highly progressive, meaning that high-income taxpayers tend to pay a lot more as a percentage of their income than low-income taxpayers.

Some question this data's focusing only on the federal individual income tax, because although the federal individual income tax is the main source of revenue in the United States, it is not the only source. Governments at all levels rely on other tax sources that are typically less progressive than the federal individual income tax. In order to put this issue into the proper perspective, I provide the relative magnitude of various taxes in the U.S. based upon how much Americans remitted in various taxes in calendar year 2007. The data are from BEA in order to allow easy comparability between state/local and federal, and they are accrual-based for the most part, not cash-flow, which is why these figures may differ slightly from budgetary totals.

Tax Source

2007 Amount
(in bill $)

      Share of Total Comment on Progressivity
Federal Individual Income Tax 1,167.3 30.2% Highly progressive
Payroll Taxes (e.g. S.S. taxes) 891.2 23.0% Progressive at low end, flat in middle, regressive at high end
Federal Excise Taxes (e.g. cigs) 97.7 2.5% Mostly regressive, except for possibly airports
Federal Corporate Income Tax 379.4 9.8% Mildly progressive to Highly progressive (depending upon incidence assumption)
Federal Estate Tax 26.5 0.7% Highly progressive
S/L Individual Income Tax 298.3 7.7% On average, mildly progressive (depends on state)
S/L General Sales Taxes 300.1 7.8% Regressive, degree thereof depends upon tax base
S/L Selective Sales Taxes 136.4 3.5% Regressive to flat
S/L Corporate Income Taxes 60.9 1.6% Likely to be less progressive than federal CIT because of mobility of capital across states
S/L Property Taxes (excl. personal) 390.9 10.1% Debated in literature, from regressive to highly progressive
S/L Other Taxes 122.5 3.2%     Varies, regressive to highly progressive      (depends on incidence of items like severance)
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