As part of ourApril 2011 newsletter, I wrote an article entitled “So Who’s Paying the Taxes?” This article summarizes information posted by the IRS asSOI Tax Stats – Individual Income Tax Return (Form 1040) Statistics, highlighting the following demographics of who is paying federal income taxes:
- 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.
I closed the article ended by asking, “Can a tax system survive when only half the population pays into it? “
Well, something in this provocative question triggered the hot button within one of our readers, and here is the e-mail that I received from him. (This person subsequently gave me permission to post his e-mail on MDTAXES.)
Perhaps you should have posed more questions for us, such as:
- Can a tax system survive when many top corporations paid no taxes in 2010?
- Can a tax system survive when corporations funnel billions in profits overseas to avoid taxation and then are allowed to write off overseas losses against domestic profits?
- Can a tax system survive when corporations unfairly manipulate the system in its favor to shield assets from taxation and reap government subsidies?
- Can a tax system be deemed fair when it subjects private citizens to the alternative minimum tax and not [free-speech loving] corporations?
- Can a tax system survive when adjusted wages for middle class families have remained stagnant for more than a decade while at the same time the wealthiest Americans and corporations have seen substantial gains?
The relative fairness of the system depends upon the lens through which it is viewed. Perhaps in a future newsletter you can inform us of the average total marginal tax burden realized by Massachusetts’ citizens broken down by incomes. This would provide a more comprehensive understanding of the contribution almost everyone certainly bears to our tax system.
I’m not an accountant and have limited education in economics. So, I rely on you as an objective resource for information and support in helping me make decisions. In this instance, I think you have failed me and perhaps other readers—not so much for giving direct misinformation but in your framing of the facts. There is no shortage of sources for heavily biased information. You could better serve your readers as a resource for sorely needed facts and information, and then leave us to draw our own opinions.
i appreciate the honest feedback, and will try to incorporate this constructive criticism in future articles.