Who pays what in taxes is about wealth and whether it pays its fair share of taxes – leave aside the question of whether the distribution of income and wealth is equitable.
Here is the distribution of wealth in America as of 2007:
Here is the distribution tax payers in the US as of 2009:
First, there is a slight shift in time as the wealth numbers are from 2007 while the taxes paid are from 2009. The problem is that the government numbers on wealth as of the 2010 US Statistical Abstracts are only current to 2007. The trend to bring the wealth numbers to comparable 2009 figures would likely show even greater skewing towards the wealthy as witnessed by the huge bonus payments on Wall Street for 2009 while unemployment hovers at 10%. Second, rather than using Net Worth which is subject to very volatile asset and liability valuations, Financial Wealth acts as a better indicator of current income and actionable/spendable wealth. Finally, there is pending in the courts over 4000 cases of Swiss bank based tax dodging which may in the future add further light on who is shirking their tax obligations.
Now what one would expect is that the percentage of taxes paid would be proportional to the financial wealth amassed because that wealth depends on government functions like education, infrastructure, health care, law enforcement, plus dozens of other enterprise standards and services which allows wealth to be attained and maintained. So if 5% of the US population has 69% percent of the financial wealth one would expect them to pay 69% of the taxes; but they actually pay only 61%. And the amount of tax evasion at the top is astounding:
In the 1950s the marginal tax rate on those earning more than $3 million a year (in today’s dollars) was 91 percent. By 1990 it was 28 percent. The IRS says that the top 400 richest tax filers actually paid a rate of just 16 percent in 2007 (the latest numbers we have). Yep, the richest earners — people who took in an average of $343 million each — probably paid a lower rate than you did. Something to consider as you sign your 2009 return.
In contrast the bottom 75% of wage earners pay 13% of all taxes but have less than 7% of all financial wealth. But as the tax chart shows, for 47% of the lowest earners, pay no income taxes at all [but they do not elude the tax man with various sales and excise tax payments incurred directly]. So who bears a disproportion tax burden – yep, the middle class. Tea Party-ers take note: those Bush tax cuts for the wealthy which have failed to trickle down into permanent jobs in these trying economic times – they might easily be done away with to restore some balance.