Taxes-Who Pays What?

The definition of what it takes to be really rich keeps going higher.  You now need to make in excess of half a million dollars a year to be counted in that elite group of households.  According to  an article on Bloomberg.com that's up 7% adjusted for inflation from a year ago.  On the other hand roughly $42,000 gets you in the top 50% bracket.  The table below as well as all the information  in this post comes from that article and shows where you might fit in on an AGI basis.

On the other hand per the table below the top 50% of taxpayers pay almost all of the income taxes.  Note that this data probably doesn't include payroll taxes, FICA and the like.  According to the article, the top 1% earned 21% of the country’s income, and paid 38.5% of federal individual income taxes. The top 1% paid a greater share of income tax to the U.S. Treasury than the bottom 90% combined (29.9%).

The article also notes that the income tax brings in about half of all Federal revenues.  Overall, the IRS data show the U.S. collected $1.6 trillion in income taxes from 143.3 million taxpayers reporting a total of $10.9 trillion in adjusted gross income in 2017, the most recent year available.  Through 2017 the data shows that the average tax rates paid have increased in recent years.  Somebody in the top 5% of all taxpayers, somebody earning in excess of roughly $209,000 in 2017,  paid an average tax rate of 23.7% vs. 20.8% in 2008.

Note however that this IRS data don’t reflect the tax overhaul signed by President Donald Trump at the end of 2017. The law lowered individual income tax rates while eliminating many deductions and slashing the rate on U.S. corporations to 21% from 35%.  It will be interesting to see in a year or so how this has changed who pays what.

Back Wednesday.

Link:  Bloomberg.com: "Americans Now Need at Least $500-000 a Year to Enter the Top 1%."