#3: How Much Income Taxes the Rich Pay
The Myth & Misconception: The rich donít pay income taxes. Or, in the words of Leona Helmsley, "Only little people pay taxes."
Wrong! While many rich people escape paying taxes or pay very little, the rich as a group pay a much higher percentage of all income taxes than does any other group.
Consider the top 1% of all income earners. For the year 2008, the top 1% had about 19% of all income but paid 37% of all federal income taxes. By comparison, households in the middle quintile of all income earners had about 14% of all income but paid less than 5% of all individual income taxes.
What’s more, the top 1%’s share of all income taxes had increased by nearly 40% since 1986, when they paid 26%of all income taxes.
On the other hand, their share of all income before taxes increased by 73%from 1986 to 2008—from 11% in 1986 to 19% in 2008
The Top 1% of Income Earners:
|Share of income:||11%||19%|
|Share of income taxes:||26%||37%|
In other words: The top 1% bore a very high percentage of all income taxes in 2008, far more than was true in 1986. But its share of all income grew considerably more between 1986 and 2008 than did its share of all income taxes.
"Share of Federal Taxes under Current Law, by Cash Income Percentile, 2008," from Jeff Rohaly, "The Distribution of Federal Taxes, 2008 – 2011," Tax Policy Center, June 11, 2008.