Once Again, IRS Data Shatters the Myth
That the Rich Don't Pay Tax
The IRS has published the latest version of one of their most revealing data sets; the collections data by percentile for the 2007 tax year, which shows conclusively that the wealthy pay far more in taxes, per dollar earned, than the poor or middle class.
Houston, Texas (ActionAmerica.org) August 2, 2009 – The IRS has just released their 1986-2007 Tax Collections Data by Percentile and as in previous years, it continues to shatter the myth that the rich don't pay tax.
The IRS tax collections data is broken down by income category or “percentiles,” from top to bottom. A review of this data shows conclusively that while those taxpayers with earnings over $160,000, in 2007 (the top 5%), accounted for just over a third (37%) of all income earned, they paid almost two-thirds (61%) of the tax that was actually collected.
Since this data represents actual payments to the IRS, it leaves no doubt, not only that the rich really do pay tax, but that they pay a disproportionately large amount of the taxes that are actually collected. Even after all of the much ballyhooed tax loopholes that you hear about in the mainstream media, the richest 5% of income earners pay almost twice their share in taxes.
|2006 IRS Collections Data (source IRS)|
Every year, between September and February, the IRS very quietly releases the most recent information (about two years old) concerning its tax collections, based on income category or "percentiles." In order to keep this important information from being lost, among the volumes of inconsequential data released by the IRS each year, ActionAmerica.org, watches for the release of this data and publicizes it. As soon as the new data becomes available, it is reprinted in an easy to read format, along with links to the source data. ActionAmerica.org then follows that with an announcement of the availability of this crucial information.
Each year, for decades, this annual collections data has decisively shattered several popular myths.
John Gaver, Editor of ActionAmerica.org points out that, “This data contains no assumptions of any kind, no massaged projections, spin or other bias. Rather, it represents monies actually collected by the IRS, broken down by income group, for the given tax years. You can't get more unbiased than money in the bank.” It takes about two years for the IRS to compile this data, so this year, the new numbers are for the 2007 tax year.
In that year, there were 141.6 million returns filed, representing a total of 8.799 trillion dollars in AGI and 1.116 trillion dollars in taxes collected. Out of that, the most reviled taxpayers – the wealthiest 1% of income earners (those who earned more than $410,096) – paid $450.9 billion in taxes or roughly 40% of the tax load, while only earning 23% of the income. This translates to almost double their share of taxes, based upon income earned.
“This is interesting,” said Gaver “in that it totally dispels the popular myths that there are so many loopholes in the tax code that the rich don’t pay taxes and that the Bush tax cuts benefited only the rich. In fact, it clearly demonstrates that our most productive citizens are paying a heavy price for their success. Despite what some pundits and the major media will have you believe, an examination of the IRS collections data reveals that it became even worse, after the Bush tax cuts. Is it any wonder why so many wealthy Americans are moving themselves and their money offshore?”
The most relevant benchmark of tax load is the "tax load ratio," defined as the ratio of percent of total income earned, to the percent of total tax paid, by each income group. That ratio, for the top-earning 1% of income earners, was higher in each of the first four years of the Bush Administration, than in any of the last four years of the Clinton Administration, completely dispelling any illusion that the Bush tax cuts benefited the rich.
In 2007, that ratio dropped somewhat and is for the first time, was lower than when Bush took office. But since the Bush tax cuts occurred years earlier, they were not responsible for this drop. Rather, it was the subsequent changes to the tax code, added by Congress.
Regardless of how some politicians and pundits may try to spin the data, it should be clear that when the wealthy pay almost double their share of the total tax load, based upon their share of income earned, there is absolutely no justification for the class-envy baiters' claims that the rich don't pay tax. In fact, this data proves, beyond any doubt, that the rich are carrying the load for the rest of us
For additional information on IRS collections data by percentile, contact John Gaver or see the ActionAmerica.org article, “1986-2007 IRS Collections Data by Income Category (Percentile)”, at http://www.ActionAmerica.org/taxecon/irsdata.shtml.
ActionAmerica.org is a popular, non-profit, conservative webzine, known for its uncompromising stand for original intent of the Constitution, the Rule of Law and for fiscal conservatism. ActionAmerica.org is also known for being a long term, outspoken supporter of the FAIR Tax, as the only responsible, fair and revenue neutral replacement for the income tax and IRS.
Editor & Publisher