NCPA - National Center for Policy Analysis

Most Income Taxes Paid By High Income Earners

October 18, 1999

The Internal Revenue Service recently released new data on the shares of total federal income taxes paid. Once again, the data show an increase in the share of taxes paid by those with high incomes.

  • In 1997, the top 1 percent of taxpayers, those with adjusted gross incomes above $250,000, paid 33.2 of all federal income taxes.
  • The top 5 percent, with incomes above $108,000, paid a majority of all income taxes: 51.9 percent.
  • The data further show that the top 10 percent of taxpayers, those with incomes above $79,000, paid 63 of income taxes; and the top 25 percent, with incomes above $48,000, paid 82 percent.
  • The top 50 percent of taxpayers, having incomes above $24,000, paid 95.7 percent, meaning that the bottom 50 percent paid just 4.3 percent.

The 1997 data simply continue a trend that has been going on for a long time. The share of income taxes paid by the top 1 percent of taxpayers has risen about 1 percent per year for many years. In fact, they have virtually doubled their share of taxes paid since 1981, when they paid 17.6 percent. Obviously, this means that the tax burden borne by the bottom 99 percent of taxpayers has fallen concomitantly from 82.5 percent to 66.8 percent. As a consequence, the effective tax rate on 99 percent of taxpayers has been reduced to 11.7 percent in 1997 from 14.2 percent in 1981.

The fact is that despite an unprecedented level of aggregate taxation, most taxpayers are paying less today than they did 20 years ago.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 18, 1999.


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