The idea that the wealthy should be made to pay their fair share has gotten increased traction lately in US politics, particularly with the popularity among Millenial and Gen-Z leftists and supporters of Bernie Sanders. This idea has been tied in particular to creating new entitlements in the area of college education (free) and health care (also free). How do we pay for new entitlements? Increase taxes on the wealthy, of course.
The only problem is that the roughly $1.7 trillion in annual US personal income taxes is already paid by the top 50 percent of income earners, or at least 97% of it according to the Congressional Budget Office. That leaves 3% being paid by the lower 50% of income earners. To put that in perspective, 1400 US individual taxpayers by themselves pay 3% of the annual US personal tax bill. That’s right…just over a thousand ultra-wealthy folks pay as much as 70 million of their fellow citizens do.
The bottom 50% of taxpayers earn about 12% of all US personal income, while those 1400 top taxpayers earn about 2% of all US personal income. Yes–86% of all US income is earned by middle and upper middle class income earners–not the ultra wealthy. That means if you want new entitlements–it is those folks you have to tax more. So 50% of the populace has to enforce its will on 47% of the remainder of the populace.
Good luck on that.
The Tax Cuts and Jobs Act that slightly lowered tax rates and gave a healthy corporate and pass-through tax break to small businesses should slant these figures slightly to the left (towards the lower 50% of earners), but don’t expect a dramatic shift that will make Sanders-nomics make more sense.