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Top 0.1 Percent Pays More Income Tax than Bottom 80 Percent

9:27 AM, Sep 21, 2011 • By JEFFREY H. ANDERSON
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Again, the stats I’ve quoted — all of which are from the TPC — are for income tax.  What if we were to include all federal taxes — including payroll taxes, which people pay and then (to a greater or lesser degree) get back in direct payments for themselves in the form of Social Security or Medicare? What if we were also to include employers’ share of these payroll taxes, crediting employees as if they had made these payments themselves (like the TPC does)? 

Factoring in payroll taxes in this manner, those in the top 0.1 percent no longer paid more in taxes than the bottom 80 percent did last year (although they did pay more than the bottom 40 percent did — four times as much, in fact). But they still paid much higher rates. The average total federal tax rate for those in the top 0.1 percent was 30.7 percent. (That’s before factoring in any state or local taxes.)  In comparison, the average total federal tax rate for those in the middle quintile was 12.8 percent. The average rate for those in the fourth quintile was 16.8 percent. And the average rate for those between the 95th and 99th percentile (those making between $204,000 and $509,000) was 23.4 percent. So even if Buffett’s secretary makes a cool half-million annually, he or she still likely pays a much lower total tax rate than the average person in the top 0.1 percent.

Certain prominent Obama supporters (Buffett, General Electric) do seem to be particularly good at avoiding paying taxes, but that doesn’t mean they’re the norm. The facts are clear: Our very richest citizens collectively pay for more of the day-to-day operations of our government than 80 percent of our citizens collectively do. The rich would already seem to be paying — as Obama likes to say — “their fair share.”

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