Fair Share? Top 20% Of Households Pay Vast Majority Of Income Taxes

lexandria Ocasio-Cortez celebrates her victory at La Boom night club in Queens on November 6, 2018 in New York City.
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The Democrats have officially taken over the House for the first time in eight years, and among the swarms of far-left "fresh faces" is democratic socialist Alexandria Ocasio-Cortez, who is proposing, among many other things, a steep increase in the federal income tax rate, which would see the top bracket jump from 37 to 70%.

That proposal is winning applause from some of Ocasio-Cortez's fellow hardcore progressives, but does the U.S. really need more progressive tax rates? Americans for Tax Reform provided some highlights of how the current tax burden plays out among some of the key brackets, and it turns out that top earners already pay their "fair share."

The top 20% of households paid 88.1% of federal income taxes, and 69.5% of total federal taxes in 2015, ATR notes, citing the most recent numbers provided by the Congressional Budget Office. ‚ÄčThat tax burden was higher than the total share of income enjoyed by that group: 55% before taxes and 48.3% after taxes.

The top quintile paid an average federal tax rate of 26.7% that year, reducing the group's average income from $292,000 to $215,000. (The top 81-90% of earners averaged $157,000 and saw that reduced to $125,000.)

The top one percent (around 1.2 million households) paid 39.4% of federal income taxes and 26.2% of total federal taxes, at an average total tax rate of 33.3%, dropping its average income from $1.9 million to $1.2 million. Its total percent of income was 16.6% before taxes and 13.2% after taxes.

A few key numbers from the other four quintiles via the CBO's 2015 report:

  • The fourth quintile was taxed at 17.9% federal income tax and saw its average income of $108,000 drop to $91,000. Its share of income was 20% before and after taxes.
  • The middle quintile was taxed at 14% federal income tax and saw its average income drop from $71,000 to $65,000. Share of income: 13.6% before taxes, 14.7% after.
  • The second quintile paid 9.2% federal income tax but saw its average income of $44,000 increase to $47,000 from means-tested transfers. Share of income: 8.7% before transfers and taxes, 11% after.
  • The bottom quintile paid 1.5% federal income tax and saw its average income of $20,000 grow from transfers to $33,000. Share of income: $3.7 before transfers and taxes, 11% after.

The CBO's report on 2015 income taxes concludes that "the combined effect of means-tested transfers and federal taxes in 2015 was, on average, to increase income at the bottom of the income distribution and decrease income at the top of the distribution."

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