At least 90 Percent of Americans Have a Lower Income Tax Rate than Romney

August 17, 2012

Scott Hodge mentioned something earlier today that might seem hard to believe, especially for readers of the Washington Post: “about 96 percent of all taxpayers have a lower average tax rate than Romney”. More precisely, in 2010, somewhere between 90 and 95 percent of Americans had a lower effective income tax rate than Romney’s 13.9 percent. In 2011, somewhere between 95 and 97 percent of Americans had a lower effective income tax rate than Romney’s 15.4 percent, at least according to the latest IRS data from 2010.

The table and chart below shows the latest IRS data on filers and their effective income tax rates. In total, there were about 143 million filers in 2010. Adding the 13 million non-filers, as estimated by Emmanual Saez, brings the total “tax unit” population to about 156 million.

More than 58 million filers were nonpayers, i.e. they had zero or negative federal income tax liability. Therefore, including the non-filers, more than 71 million Americans paid no federal income taxes in 2010, representing about 46 percent of the population.

Another 27 million, or 17 percent of the population, had an effective income tax rate of between zero and 5 percent. Over 89 percent of Americans had an effective income tax rate of less than 12 percent, 95 percent had a tax rate of less than 15 percent, and fully 97 percent of Americans had a tax rate of less than 17 percent. Therefore, the vast majority of Americans pay less than Romney’s 2010 rate of 13.9 percent or his 2011 rate of 15.4 percent.

Nonfilers and Filers by Effective Tax Rate, 2010

Returns

Share of Filers

Share of Filers+NonFilers

Filers paying 0% or less (nonpayers)

58,390,289

40.87%

37.39%

Filers paying between 0% and 5%

27,220,034

19.05%

17.43%

Filers paying 5% to almost 7%

12,856,345

9.00%

8.23%

Filers paying 7% to almost 10%

20,412,110

14.29%

13.07%

Filers paying 10% to almost 12%

7,172,217

5.02%

4.59%

Filers paying 12% to almost 15%

8,324,523

5.83%

5.33%

Filers paying 15% to almost 17%

3,394,093

2.38%

2.17%

Filers paying 17% to almost 25%

4,294,392

3.01%

2.75%

Filers paying 25% to almost 30%

722,992

0.51%

0.46%

Filers paying 30% to almost 50%

70,475

0.05%

0.05%

Filers paying 50% to almost 100%

1,229

0.00%

0.00%

Filers paying 100% or more

7,523

0.01%

0.00%

Total Filers

142,866,222

100.00%

91.49%

Non-filers

13,286,000

8.51%

Total Filers + Non-filers (tax units)

156,152,222

100.00%

Tax units paying less than 12%

139,336,995

89.23%

Tax units paying less than 15%

147,661,518

94.56%

Tax units paying less than 17%

151,055,611

96.74%

Source: IRS, Emmanuel Saez

Follow William McBride on Twitter @EconoWill


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