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 taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. 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 taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. , 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 |
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) |