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Rhetoric v. Reality: Taxes and Income

January 25, 2012

Despite ongoing claims that high-income Americans pay taxes at a lower rate than middle- or low-income Americans, recent statements in the press and actual data from nonpartisan sources show that that is not the case:

  • 51% Pay No Income Taxes: “In summary, for tax year 2009, approximately 22 percent of all tax units, including filers and non filers, will have zero income tax liability, approximately 30 percent will receive a refundable credit, and approximately 49 percent will have a positive income tax liability.” (Joint Committee on Taxation, April 29, 2011)
  • Investment Taxes Are Often Taxed Twice: “There is a case to be made that capital gains and dividend taxes are a second tax on earnings that have been subject to the 35 percent corporate income tax; the [non-partisan Congressional Research Service] report acknowledges that this argument has merit.” (Washington Post Editorial Board, January 16, 2012)
  • Most Americans Pay Less Than 15%:  “[H]ere’s why [Romney’s] effective rate is probably higher than most people’s: The effective tax rate is always going to be lower than one’s top income tax rate.  And the top rate for roughly four-fifths of Americans is 15% or less, said Roberton Williams, a senior fellow at the Tax Policy Center.  In other words, 80% of Americans have an effective rate below 15%.” (CNN Money, January 19, 2012)

Average Tax Rates Paid by Americans




CBO Data



IRS Data



JCT Data



Congressional Budget Office (CBO)
:  According to the most recent CBO data on federal taxes (individual income taxes, social insurance taxes, corporate income taxes, and excise taxes) and household income from 2006, the middle household income quintile (whose average pretax income is $60,700) pays an average tax rate of 14.2 percent.  The top 1 percent of American households, who have an average household income of $1,743,700, pay an average tax rate of 31.2 percent.  CBO estimates the top 5 percent of American households, with an average income of $564,200, pay an average tax rate of 29 percent.

Internal Revenue Service (IRS):  According to the most recent IRS data from 2008, Americans with incomes of $1,000,000 or more pay an average income tax rate of 23.3 percent, while those with incomes between $50,000 and $100,000 pay an average income tax rate of 8.9 percent.

Joint Committee on Taxation (JCT):  According to recent JCT estimates of income, social insurance, and excise taxes in 2011, Americans with incomes between $50,000 and $75,000 will pay an average tax rate of 12.8 percent.  Americans with incomes over $1,000,000 will pay an average tax rate of 23.6 percent.