Tax commentary from both politicians and the public leads me to think very few people understand how our tax system actually works, and who is paying the bill to operate our government. The Tax Cuts and Jobs Act (TCJA) compounded the sentiment that the rich pay too little in taxes, and the poor and middle class are left to shoulder the burden. I thought tax season would be the perfect time to look at the numbers and let them speak for themselves.
- According to the Institute on Taxation and Economic Policy, the bottom 60% of Americans pay 16% of all taxes, while the top 5% pay 40%.
- The percentage of total taxes paid by the top 5% has dropped as a result of the TCJA, but only by .7%. The drop came from a slight decrease in the taxes paid at the top, not an increase paid by lower income levels.
- The US has a very progressive tax structure in which the highest earners pay a significant percentage of their income to taxes. It is worth noting that $120,000 of income puts you in the top 10% of income earners.
At the end of the day, all tax-payers contribute to keeping the cogs of our government turning. But a lot fewer are required to pay the lion’s share.
Any opinions are those of Brian Cochran and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.