At the present time fully 58.7% of Federal income taxes are paid for by the top 5% of households and 86% by the top 20%. In a word, the preponderance majority of the nation’s 160 million income tax filers pay no tax at all (about 45 million returns owe no taxes) or after the vastly enlarged standard deduction and increased child credits owe a single digit percentage of their income in Federal taxes.
Indeed, as shown below, in 2022 the bottom 80% of taxpayers paid only $292 billion in income taxes, amounting to just 13.7% of total collections. Against AGI, the effective tax rate was just 5.6%.
At the end of the day, the GOP and Dems have competed their way into a de facto income tax holiday for 80% of households. And we don’t see how you raise their taxes in that competitive environment, while recognizing the the GOP has every reason to staunchly oppose shifting even more income tax burden on the top of the economic ladder.
Can the Welfare-Warfare state be paid for by just the upper 20% from here on out?
