There are about 180 million taxpayers in the United States.  At the national level, the United States has a highly progressive income tax.[1]  Who pays what share of taxes? 

            About 43 percent of taxpayers earn less than $50,000 a year.  That’s a little north of 72.5 million people.  Their share of the total income is 10.5 percent.  They pay -4.8 percent of the income tax.  That is, through one tax “credit” or another, they get a “refund” check from the IRS.  The median income—half above, half below—is just a hair under $50,000 a year. 

            About 27 percent of taxpayers earn between $50,000 and $100,000 a year.  They account for about 18.6 percent of total income.  They pay 6.3 percent of the income tax. 

            About 20 percent of taxpayers earn between $100,000 and $200,000 a year.  They account for 26.6 percent of total income.  They pay 19.8 percent of the income tax. 

            About 10 percent of taxpayers earn more than $200,000.  Their share of the total income is 44.3 percent.  They pay 78.7 percent of the income tax.  Those earning $1 million or more receive 16.1 percent of total income.  They pay 39 percent of the taxes.  There are about 900,000 taxpayers in this group.  That’s about 0.5 percent of the taxpaying population. 

            Several different things are going on around progressive tax rates and the debt ceiling. 

            First, the United States also has a highly “progressive” distribution of income.  It is even more “progressive” than is the tax system.  About 70 percent of taxpayers account for 29.1 percent of total income.  About 30 percent of taxpayers account for 70.9 percent of income.  As Willy Sutton said, “That’s where the money is.”  

Second, taxation and spending are explicitly a transfer from the few rich to the many not-rich.  According to one author, “Democrats have a huge advantage (63 percent) with voters earning less than $15,000 per year. This advantage carries forward for individuals earning up to $50,000 per year, and then turns in the Republicans’ favor — with just 36 percent of individuals earning more than $200,000 per year supporting Democrats.  Interestingly, the median household income in the United States is $49,777 — right near the point where the Democratic advantage disappears and the Republicans take over.” Moreover, “About half of Democrats express satisfaction with their personal financial situation, compared with 61 percent of Republicans and 52 percent of Independents.”[2]  Democratic voters may respond enthusiastically to government action to address their dissatisfaction. 

Third, the rich don’t see this transfer system as legitimate beyond a now-uncertain point.  From the 1930s through the 1960s, the American economy was dominated by well-established industries whose entrepreneurial founders had long since handed over control to professional managers.  These companies were highly-unionized.  The American economy felt little foreign competition.  Content with their trust funds, sinecures, and charities, the “owners” had gone off to Harvard and Palm Beach.  Then came the upheavals of the 1970s and the rise of many new entrepreneurs building new industries.  They had earned, not inherited, their money.  They wanted to keep it.  Since the Reagan era, they have been fighting back to good effect.  Democrats now pine for the “Good Old Days.”[3]  Complexity and nuance are lost in this ugly fight. 

---

[1] Laura Saunders, “It’s Tax Time.  Here’s Who Paid the Most,” WSJ, 15-16 April 2023. 

[2] See: Economic Demographics of Democrats & Liberals – Politics & Debt 

[3] Walter Russell Mead, “”Progressives’ Want to Go Back to the 1950s,” WSJ, 2 May 2023.  Who doesn’t?