NCPA - National Center for Policy Analysis


January 21, 2008

Since the 2001 and 2003 Bush tax reforms, the share of total income received by the wealthy has increased; however, their share of the total tax burden has increased even more than their income share, says Michael D. Stroup, a professor of economics and associate dean of the Nelson Rusche College of Business, Stephen F. Austin State University.

The top 1 percent of earners pays more than one in every three dollars the IRS collects in taxes.  Furthermore, data from the Tax Foundation shows that the share of federal income taxes paid by wealthier income groups has increased over time:

  • From 1986 to 2004, the total share of the income tax burden paid by the top 1 percent of income earners grew from 25.8 percent to 36.9 percent.
  • During the same period, the total share of the tax burden paid by the bottom 50 percent fell from 6.5 percent to 3.3 percent.

The Congressional Budget Office reports that:

  • The percentage of income the top 1 percent of tax filers paid in federal income taxes rose from 18.3 percent to 19.6 percent from 1986 to 2004.
  • By contrast, the percentage of income the bottom fifth of tax filers paid in federal income taxes dropped from 0.4 percent to zero.

Over time, the share of taxes paid by the rich has grown more than their share of income.  For example, between 1986 and 2004:

  • The income share of the top 1 percent of taxpayers rose 7.7 percentage points, from 11.30 percent to 19 percent of total income.
  • The share of income taxes paid by the top 1 percent rose even more, by 11 percentage points, from 26 percent to 37 percent of total income taxes paid.

Source: Michael D. Stroup, "Tax Code Became More Progressive after the Bush Tax Cuts," National Center for Policy Analysis, Brief Analysis No. 606, January 21, 2008.

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