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Tax Foundation: Rich pay staggering share of total income taxes

Photo of Betsi Fores
Betsi Fores
The Daily Caller News Foundation

Are the rich paying their fair share? It’s a question that has come up as President Barack Obama and House Republicans begin to haggle over the budget.

The top 10 percent of taxpayers paid more than 70 percent of the total income tax revenue collected in 2010, according to research from the D.C.-based Tax Foundation. “That’s up from 55% in 1986,” CNN notes.

The remaining 90 percent paid just 30 percent, with 47 percent having no income tax liability.

“There’s been a huge myth created that the rich aren’t paying anything,” William McBride, the Tax Foundation’s chief economist, told CNN. “The rich pay a much higher rate than the poor.”

This research is corroborated by Congressional Budget Office numbers from last year, which found that the “top 20 percent of earners — the top quintile — bore 67.9 percent of the federal tax burden in 2009,” The Daily Caller News Foundation reported. (RELATED: Top earners shoulder heavy tax burden)

According to Roberton Williams, a senior economist at the Tax Policy Center, the tax code has been getting more progressive. Just under 30 years ago, there were only two tax rates: 15 percent and 28 percent. Today, there are seven income tax brackets, ranging from 10 percent to almost 40 percent.

“While taxes on investment income have declined a bit since 1986, incentives like child care and income tax credits for the poor have been greatly expanded,” CNN writes, further complicated the tax collection process.

That doesn’t mean the rich never take advantage of tax loopholes. The Tax Policy Center found that last year, nearly 4,000 households with income greater than $1 million paid no taxes at all.

Closing loopholes is a major issue as Congress debates comprehensive tax reform.

Bob McIntyre, director of the liberal Citizens for Tax Justice, says that the federal numbers do not tell the whole story. According to McIntyre, the top 10 percent pay just under half of tax revenues when state and local taxes are accounted for.

“The system is a little progressive, but not much,” McIntyre said.

McIntyre explains that the wealthy pay more because they make more.

“The vast majority of income gains have gone to the people at the top,” he said.

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