On July 14th, the IRS held a public hearing for the debt-equity rule (section 385 of the IRS code) that the Treasury Department proposed last April. The hearing, which had as many as 16 speakers from various industries,...
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- Who Really Pays Income Taxes?
Who Really Pays Income Taxes?
Do wealthy taxpayers pay their fair share of taxes? Polls consistently show Americans believe they don't. But are they right?
The U.S. Treasury Department recently released a memo (PDF) that sheds some light on the issue:
...[A] small group of higher-income taxpayers pay most of the individual income taxes each year. In 2002, the latest year of available data, the top 5 percent of taxpayers paid more than one-half (53.8 percent) of all individual income taxes, but reported roughly one-third (30.6 percent) of income.
From the memo, here's the projected breakdown of income tax payments by income group for 2005:
Projected Share of Individual Income Taxes and Income in 2005 (U.S. Treasury Estimate)
Percent of Income Taxes 33.7 54.1 65.8 83.6 96.4 3.6 Percent of Income 16.5 31.0 42.1 64.7 86.1 13.9
With the wealthiest 1 percent of taxpayers paying roughly 33.7 percent of income taxes and earn just 16.5 percent of income, it's hard to argue they're not paying a fair share by any reasonable definition of "fair."
Be sure to check out the Tax Foundation's summary of the most recent income tax data for more.
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