Supporters of progressive income taxation should be happier than they seem to be every April 15.
Despite whining from politicians and activists that the rich don’t pay their “fair share,” the United States federal income tax is extremely progressive.
Consider: There were 30,382 tax filers with incomes of $10 million or more in 2023, the latest year IRS data is available. That includes all sources of income. This tiny group of people, less than 0.02 percent of all tax filers and 10,000 fewer than fit into Nationals Park, made 5.9 percent of all income — and paid 10.9 percent of all income taxes.
The 101,509,107 tax filers who made under $75,000 together made 21.9 percent of all income and paid 7.3 percent of all income taxes.
Income is unevenly spread across the population, and the income tax burden is even more skewed — toward the top.
Zoom out from the extremely rich to just the well-off, and it becomes more apparent how much higher earners are shielding lower earners from a greater income tax burden.
Just 25.6 percent of tax filers had incomes of $100,000 or more. They paid almost $9 out of every $10 (87.4 percent) that the federal government collected from income tax.
People making under $100,000 are not freeloaders. They pay federal payroll taxes and state sales taxes. If they own a home, they pay property taxes directly. If they rent, they pay them indirectly. They also indirectly bear the burdens created by tariffs and corporate taxes.
If the federal government wanted to raise more money from income taxes, lower earners shouldn’t bear the additional burden, but the very highest wouldn’t be good targets either.
The upper-middle class is where more of the less-taxed money is located. Filers with incomes between $100,000 and $500,000 make 49.7 percent of taxable income, yet they pay just 43 percent of all income taxes.
This fact is tremendously inconvenient for revenue-hungry politicians in a country where tens of millions of people are upper-middle class, and even more people want to become upper-middle class. Republicans promise not to raise income taxes on anyone, and Democrats promise not to raise income taxes on anyone making less than $400,000 — which is almost everyone.
The IRS uses $500,000 as a cutoff rather than $400,000, but the basic point stands. Filers with incomes of $500,000 or more had $3.4 trillion of taxable income in 2023. Filers with incomes between $100,000 and $499,999 had $5.8 trillion. There’s more juice to squeeze there.
But squeezing it would make the income tax less progressive than it is right now and reverse the long-term trend of the income tax’s increasing reliance on the very highest earners. That’s politically untenable.
In 1980, the top 1 percent of income earners paid 17 percent of federal income taxes. In 2022, they paid 40 percent, according to the Congressional Budget Office.
High earners shoulder an income tax burden far in excess of their proportion of the national income, while the bottom half of earners pay very little. Any conversation on changing the tax code has to start with this fundamental truth, rather than the misbegotten notion that high earners get off scot-free. Expect a lot of the 2028 presidential candidates to pretend otherwise.
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