Progressive taxation: who pays most of the income tax?

Alexander Fishkov

Alexander Fishkov, Ph.D. student Computer Science

In late 2015 the IRS released their tax stats data update for the year 2013. Today we will analyze the data on rates and examine where the majority of income tax payments came from. This time we will focus on individual tax returns excluding dependents.

In the year 2013 a total of 138 million taxpayers reported over $9 trillion of adjusted gross income and payed $1.2 billion in income tax. Let us see how these tax payments are distributed among different income groups.

In 2013, the top 50 percent of all taxpayers (69 million individuals) paid 97.2 percent of all income tax, while the remaining 2.8 percent was paid by the bottom 50 percent. The wealthiest group (the top 1 percent) paid 37.8 percent of all taxes, which is more than one-third of all the tax payments made by the top 50 percent group. It is similar to the previous five years, with the exception of 2011 when this proportion dropped to 35.1 percent.

As we can see, the tax system in the United States is indeed progressive: the major tax burden is placed on the rich. The top 5 percent earn 34.77 percent of all income and pay 58.54 percent of all taxes, while middle-class groups like the top 50 percent-20 percent earn one-fifth of all income and pay only 11 percent of all taxes.

Not surprisingly, the average effective tax rates are also higher for the top earners. The top 1 percent of taxpayers (annual income above $438,000) pay an average income tax of 27.1 percent.

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About Alexander Fishkov

Alexander Fishkov

Alexander Fishkov, Ph.D. student Computer Science

Alexander is a Ph.D. student in Computer Science. He currently holds B.S. and M.S. degrees in Applied Math. He has experience working for industry major companies performing research in the fields of machine learning, data mining and natural language processing. In his free time, Alexander enjoys hiking, Nordic skiing and traveling.

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3 thoughts on “Progressive taxation: who pays most of the income tax?”

  1. Add in FICA taxes of 15.3%, which the rich don’t pay on income above about $100K, and the figures will likely be very different.

  2. Of course not Einstien, FICA taxes (social security and medicare) are regressive – both the tax and benefit payments are reduced as you make more income, you take out of it what you put into it. The rich don’t pay FICA over $100k because they would not in turn pull it out.

  3. I don’t mean to imply that I think a flat tax is a certain $ amount for all taxpayers. I am just illustrating that whatever the flat percentage rate may be, it will hit the poor’s lives much harder than it will the rich. That’s not an egalitarian way to raise taxes.

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