How Much of US Tax Burden Does the Top 5% of Earners Bear?

The discussion about the distribution of tax burdens in the United States often centers on how much of the tax burden is carried by the highest-earning individuals. This is particularly pertinent in the context of wealth inequality and debates over taxation policies. Recent data from 2021 provides some answers to this question.

The Distribution of Tax Burden

According to the latest data from 2021, the top 5% of wage earners accounted for 42.0% of the earned income but bore 65.6% of the total income tax burden. This highlights a significant disparity between the earnings and tax contributions of the highest earners compared to the rest of the population.

My Personal Insight into High-Earning Profiles

I personally identified as being part of the top 1% of income earners, with a combined household income from my salary, investments, and property. With a married couple and two children, we own a home in California, and our blended income has been consistently high over the past several years, illustrating the financial implications of being in this echelon.

Tax and Income Breakdown (2014-2017)

To give a more detailed view, I have tracked my family's tax liabilities and gross income from 2014 to 2017, as follows:

2014: 33.9% of a gross income of $325,000 2015: 34.0% of a gross income of $333,000 2016: 36.6% of a gross income of $355,000 2017: 33.0% of a gross income of $358,000

These percentages suggest that while our income was consistently within the top tier, our tax liabilities were a significant portion of our gross earnings, reflecting the progressive tax system that disproportionately affects the highest earners.

The Broader Picture

Moving beyond personal experiences, it is worth noting that a broader analysis of tax contributions in the United States reveals that the top 5% of taxpayers shoulder a substantial portion of the overall tax burden. Specifically, it is estimated that the top 5% of taxpayers contribute approximately 58% of all income taxes.

Implications and Further Reading

Understanding the tax burden carried by the top 5% of earners can inform broader discussions on fiscal policies, wealth redistribution, and economic inequality. For more detailed insights and further reading on this topic, consider exploring academic papers, government reports, and independent research on taxation in the United States.