Taxes

SO WHO’S PAYING THE TAXES?

According to the New York Times on March 25, 2011, GE earned more than $14 billion in profits last year, yet didn’t pay a dime in U.S. Corporate Income taxes. Does news like that make you wonder who is paying the nation’s taxes?

When it comes to personal taxes, the IRS tracks and reports the demographics of who is actually paying. This data is published as SOI Tax Stats – Individual Income Tax Return (Form 1040) Statistics.

According to information detailed on their Excel report, there were approximately 140 million individual tax returns filed with positive Adjusted Gross Income (AGI) for each of the prior two years. Here are the highlights:

  • Top 1 Percent: To be in the top 1 percent of filers, your AGI needs to exceed $380k. This group of taxpayers currently reports 20% of the country’s income and pays 38% of the personal income taxes.
  • Top 5 Percent: Tax returns showing AGI of at least $160k made the top 5 percentile of all filers. In 2009, these taxpayers reported 35% of the country’s income, but paid 59% of the personal income taxes.
  • Top 10 Percent: Anyone reporting AGI in excess of $114k would be in the top 10 percentile. This group reported 46% of the country’s income, but paid 70% of the personal taxes.
  • Bottom 50 Percent: The bottom half of the income reporting population paid just 2.7% of the personal income taxes.

Can a tax system survive when only half the population pays into it? Stay tuned.

Income Reported and Income Taxes Paid

AGI
Threshold
% of AGI
Reported
% of Tax
Paid
Top 1% $380k 20% 38%
Top 5% $160k 35% 59%
Top 10% $114k 46% 70%

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