Given the recent hullabaloo over President Trump’s Income Tax Returns, I thought it would be fun to explore our current facts on who actually pays the bulk of the U.S. Federal Income Tax… under the new Trump Tax rules that started in 2018.
First, did you hear of the story of 10 Democrats who went to lunch? The bill came to $100. (Notice that averages $10 a person?) They all decided to divide paying the bill by their respective tax brackets. The first 3 would pay $0, the 4th would pay $1, 5th would pay $2; the 6th would pay $3, the 7th would pay $7 (that’s weird!), the 8th would pay $11, the 9th would pay $16, and the 10th would pay $60.
Some very important points to notice in this “story.” Seven Democrats got away with paying less than the cost of their meal. Three of those first seven got their meal for free! Three Democrats had to pay more than the cost of their meal … to help pay for the break the other seven got. The 10th Democrat (the “really rich one”) ended up carrying the load for the first three who didn’t pay anything at all as well as 90% of the fourth.
Here are some statistics that the IRS just released for the 2018 tax year.
The top 1% of individual taxpayers paid 30% of all federal income taxes. So how does the IRS define this group? Their Adjusted Gross Income is at least $450,000 or higher. This group represents 21% of the total Adjusted Gross Income of all taxpayers combined.
The highest 8% of individual taxpayers paid 62% of all federal income taxes. This group accounted for 41% of all Adjusted Gross Income of all taxpayers combined. That means they had to have at least $200,000 of Adjusted Gross Income or higher to be counted in this prestigious group.
The top 39%, those with Adjusted Gross Income of at least $100,000, bore 83% of all federal income taxes collected in 2018!! Are you in that group?
The bottom 39% of all taxpayers (who filed tax returns) paid only 11% of the total federal income tax collected. Their share is so low because many of them get substantial tax relief through refundable tax credits.
So, to answer the question, “Do the Rich pay their fair share of taxes?” The answer is a resounding YES. In fact they pay WAY more than their fair share. 8% of the taxpayers in America (The “rich”) pay 62% of all Federal Income Tax. The bottom 50% of the country (remember there are a whole lot that don’t even have to file an income tax return, so many can not be called “taxpayers”) pays little or NO Federal Income Tax!
Did you hear? Prov 22:2 says, “The rich and the poor meet together; the LORD is the Maker of them all.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.