The rich pay a lot in taxes
On January 26, Gov. Tim Walz unveiled the Minnesota COVID-19 recovery budget. Among other things, the plan includes proposals to raise the individual and corporate income taxes. In Walz’s words, the tax hike will ensure that the rich pay their fair share.
Interestingly enough, Walz, like other proponents of taxing the rich, does not define what that fair share is.
Looking at the data, however, the rich pay much more in taxes compared to low-income individuals.
The rich pay the majority of federal income taxes
According to a Tax Foundation analysis of IRS data,
In 2018, the bottom 50 percent of taxpayers (those with AGI below $43,614) earned 11.6 percent of total AGI. This group of taxpayers paid $45.1 billion in taxes, or roughly 3 percent of all federal individual income taxes in 2018.
In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9 percent of all AGI in 2018 and paid 40.1 percent of all federal income taxes.
In 2018, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid roughly $615 billion, or 40.1 percent of all income taxes, while the bottom 90 percent paid about $440 billion, or 28.6 percent of all income taxes
Additionally, the proportion of income taxes paid by the rich has been increasing over time.
The share of income taxes paid by the top 1 percent increased from 33.2 percent in 2001 to a high of nearly 40.1 percent in 2018. Over the same period, the share paid by the bottom 50 percent of taxpayers fell from 4.9 percent to just below 3 percent.
Not to mention, high-income taxpayers have, on average, the highest average income tax rates.
Fair is hard to define
What is fair is subjective.
However, according to 2018 tax data, not only did the rich pay the majority of the federal income taxes, but their share of income tax revenue has increased over time. Additionally, high-income individuals face the highest average income tax rates.