The fight over income inequality and a fair tax code has dominated the recent political debate. The White House, along with all the GOP presidential candidates, and every think tank in Washington has submitted their blueprint of what a reformed tax code should look like. Obama’s tax plan focuses on eliminating distortions and loopholes and trying to rein in income inequality. His framework attempts to raise taxes on the rich and force them to pay their “fair share.” But what is any income group’s “fair share”? Let’s take a look at the current income tax distribution by national income group.
Data from the IRS (2009) and the Tax Policy Center. © Joseph Chrisman American Action Forum
As you can see from the graph above, the top 1% of income earners pay 37% of the total national income tax, they make 17% of total national income, and are about 1.4 million people. The top 5% pays almost 60% of the total nation income tax and make about 32% of national total income.
The bottom 50%, half of all tax paying Americans pay a tiny 2% of total national income tax, and earn about 17% of total national income.
After looking at these numbers one has to ask themselves, “How much or little does one have to pay to contribute their “fair share”?