Who Pays Federal Income Taxes

Per the Tax Foundation, the IRS released updated federal tax burden numbers for tax year 2013. In case anyone is interested, some numbers below that show the progressivity of the federal tax system and help you figure out where you fit in. No political intentions with this post… I leave that to the politicians. I’m sure there are about as many readers who feel there’s too much progressivity as there are those who feel there’s not enough.

· The top 1% of filers had adjusted gross income (AGI) of at least $429k, earned 19% of the total AGI for all filers, and paid 38% of all Federal income tax.

· The top 5% of filers had AGI of at least of at least $180k, earned 34% of total AGI, and paid 59% of all Federal income tax.

· The top 10% of filers had AGI of at least $128k, earned 46% of total AGI, and paid 70% of all Federal income tax.

· The top 25% of filers had AGI of at least $75k, earned 68% of total AGI, and paid 86% of all Federal income tax.

· The top 50% of filers had AGI of at least $37k, earned 89% of total AGI, and paid 97% of all Federal income tax.

· The bottom 50% of filers had AGI less than $37k, earned 11% of total AGI, and paid 3% of all Federal income tax.

Note that in most cases, AGI is all sources of income (wages, self-employment, investments, rents, etc.) minus items that are excluded from income (401k contributions, health insurance premiums, FSAs, etc.) and certain “above-the-line” deductions (HSA contributions, IRA contributions, etc.). It does not subtract out itemized deductions, the standard deduction, or personal exemptions. Those come out of AGI to determine taxable income, to which the tax rates are then applied. The taxes paid above also excludes social security and medicare taxes since they’re not part of the federal income tax.

Full analysis and historical date back to 1980 are available on The Tax Foundation website.

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