In 2017, Half of all Taxpayers Paid 97% of all Federal Income Taxes

The Internal Revenue Service (IRS) has released data on individual income for the tax year 2017. And contrary to the idea that the rich do not pay taxes, the data shows that the U.S tax system is actually progressive.

High-income earners generally the majority of income tax revenue. High-income earners also pay higher tax rates. Moreover, the share of taxes for the 1% rose as their reported taxable income also rose. This is contrary to the popular view that the rich do not pay their fair share of taxes.

Half of all taxpayers paid 97% of All Federal income taxes

In 2017, the top 50 percent of income earners paid 97 percent of federal tax income, while the bottom 50 percent only paid 3 percent. Looking at different groups, the top 5 percent paid about 60 percent of total income taxes, with the highest-burden falling on the top 1 percent. The top 1 percent even paid more taxes than the whole bottom 90 percent — the top 1 percent paid 38.5 percent of all taxes compared to 29.9 percent for the bottom 90 percent.

High-Income Taxpayers face high tax rates

Apart from paying the majority of tax revenue, the rich also face higher tax rates. That is they pay a higher proportion of their income compared to low-income taxpayers. In 2017 the top 1 percent had the highest effective average income tax rate — of 26.8 percent — while the bottom 50 percent faced a tax rate of 4 percent. All income levels in the top 50 percent paid a higher income tax rate compared to individuals in the bottom 50 percent.

The idea that the rich do not pay their fair share — however fair is defined — is not rooted in truth. According to IRS data, the US tax code is progressive. High-income earners do not only pay the majority of income taxes, but they also face higher tax revenues than low-income taxpayers.