November 22, 2024
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PERSONAL FINANCE TAX TIMES

Shocking Report Reveals How Super-Rich Pay Lower Taxes Than You!

Shocking Report Reveals How Super-Rich Pay Lower Taxes Than You!

Tax Fairness: Debunking Myths About Wealthy Americans and Taxes

Have you ever heard the argument that the wealthy don’t pay their fair share of taxes? It’s a common refrain from many progressive lawmakers, but is it really true? A recent Treasury study sheds light on this issue, revealing some surprising insights about how much the rich actually contribute in taxes.
Here are some key takeaways from the study:

  1. Rich Americans Pay More Than the Middle Class

    • The rich pay more than a third of their annual income in federal taxes.
    • When state and local taxes are added, the total tax burden for the wealthy exceeds 45 percent.
  2. Segmenting Taxpayers by Wealth, Not Income
    • The study classifies taxpayers by wealth rather than income, challenging the notion that the rich pay less.
    • However, data shows that the wealthy are not undertaxed relative to their income.

In 2019, there were 183 million tax units, with an average adjusted gross income (AGI) of $65,000 and $503,500 in wealth.

  1. Effective Tax Rates Rise with Income

    • Wealthier individuals face higher effective tax rates than the average taxpayer.
    • The rich pay up to 60 percent of their income in taxes, driven by federal, state, local, and foreign taxes.
  2. Corporate Income Estate Taxes Play a Significant Role

    • Federal taxes on corporate income and estates contribute to higher effective tax rates for the wealthy.
    • Despite assumptions about the burden falling on capital owners, the impact on workers’ wages is debated.
  3. State Taxes Compound Tax Burdens

    • State and local taxes add to the tax burden, significantly raising effective tax rates for the wealthy.
    • For the top 0.01 percent, state and local taxes can push the combined rate to 46 percent.
  4. Foreign Corporate Taxes Increase Tax Rates
    • Foreign corporate income taxes further elevate effective tax rates for the wealthy.
    • Some individuals face rates as high as 50 percent due to taxes owed abroad.

The study also looks at the tax burden of the "Fortunate 400," the wealthiest individual taxpayers in the US. Despite assumptions about their tax contributions, the study reveals that wealthy Americans pay substantial amounts in income taxes.

In conclusion, the Treasury study highlights the progressive nature of tax systems across different levels of government. While the focus often centers on US tax burdens, the total taxes paid by the super-wealthy, including foreign obligations, paint a different picture.

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