Americans think they pay too much in taxes. Here’s who pays the most and least to the IRS
Most Americans think they pay too much in federal income taxes — and about 6 in 10 mistakenly believe middle-income households shoulder the highest tax burden.
In fact, only about 18% of adults correctly identified the group facing the highest federal tax burden, which are high-income Americans, according to a January poll from AP-NORC.
With less than one week left to file tax returns for 2023, taxes are on the mind of millions of Americans, with many expecting tax refunds, and others dinged with an IOU with the IRS. Only about 27% of taxpayers believe their federal income taxes are fair, with 60% believing their tax burden is too high, AP-NORC found.
In fact, the U.S. tax system is designed to be progressive, meaning that lower-income Americans pay a smaller share of their income in federal taxes than high-income workers, noted Alex Muresianu, senior policy analyst at the Tax Foundation, a think tank focused on tax issues.
“Raising another dollar from someone who’s higher income is not as going to be as much of a burden to them as raising another dollar from someone who’s lower income,” Muresianu said.
At the same time, there’s a push from some lawmakers and policy experts to boost tax rates for the rich, with President Joe Biden proposing to reverse a rate reduction for the nation’s top earners that was part of the 2017’s Tax Cuts & Jobs Act. Under Biden’s proposal, the top marginal rate would return to 39.6% from its current 37%.
The typical earner paid $14,279 in federal income taxes, with an average tax rate of 14.9%, in 2021, the most recent data available, according to a recent Tax Foundation analysis of IRS data. Federal taxes don’t include the payroll tax that covers Social Security and Medicare.
But it’s the top 50% of earners who contribute almost all of the nation’s federal taxes, at nearly 98%. The bottom 50%, who individually make below $46,637 annually, pay about 2.3% of the country’s tax receipts.
The top 10%, with incomes of at least $169,800, pay about three-quarters of the nation’s tax bill, the analysis found.
Even though most Americans believe the middle class bears the heaviest tax burden, it’s actually the top 1% who pay the highest federal tax rate, at 25.9%, the Tax Foundation analysis found.
Even so, about 6 in 10 Americans said they were bothered by the feeling that corporations and the rich aren’t paying their fair share in taxes, Pew Research found last year. That may explain why about two-thirds of those polled said they support higher taxes on the rich.
