Civics 101, Part 2: Who Pays for Government

There are two ways of looking at this crucial issue.  Who pays what, and, who pays what relative to their ability to pay.  It’s the latter that really measures the tax burden.  The income tax gets most of the attention, and it is highly progressive (i.e., the more you make, the higher rate you pay), hitting rich people hard.  The top 1% of earners  pay about 80% [2/3] of it, if memory serves.

But, that is only one tax at one level.  As the chart below shows, only about 40% of federal taxes come from the individual income tax.

Moreover, as this second chart, below, shows, when you (1) include state and local taxes. which are one-third of the total and hit lower-income people much harder; and (2) compare total taxes to people’s incomes (ability to pay), the picture is quite different.

See?  Even though upper income people pay more of some taxes — income, inheritance — the tax code overall is only very slightly tilited against them relative to their ability to pay.  This is because the non-rich pay the bulk of other taxes, like sales taxes.

There are many other suprising truths about our tax code, but I wanted to highlight these two.

Next:  Not sure.  Any ideas?

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One response

  1. […] don’t forget these old posts of mine on taxes, but especially this one, Who Pays For Government?. Categories: Economy/Economics, Politics Tags: Government spending LikeBe the first to like […]

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