USA Revenue Tax Facts

How progressive is your tax structure?

This chart illustrates the progressive structure of the federal income tax system as seen in the average tax rates (center column) computed from tax returns filed in 2007. For example, the top left block indicates that the top 1% of tax returns reported $2.0 trillion in adjusted gross income, which was 22.8% of the total adjusted gross income of $8.8 trillion for the year. The top right block indicates that $451 billion in income taxes was collected from that group, which amounted to 40.4% of the total $1.1 trillion of income taxes for the year.

The progressivity of the income tax system is further demonstrated by the fact that the top 1% paid more income taxes ($451 billion) than the bottom 95% ($438 billion).

I'm not at the top or bottom of the USA Tax food chain. No doubt everyone's view is reflective of where they are on the tax ladder. It is no surprise your view on (FICA taxes) Social Security and Medicare taxes (and health insurance) most often reflect ones age.

Instead of the stereotypical conservative or liberal view, I'd like to examine this from a business or investment prospective.

For example, in investing like business, it pays to diversify. A business built on ten jumbo whale clients is at greater financial risk than one built on ten thousand little tuna's. So, I'd say the USA (like any school district) needs to focus on growing a vibrant middle class tax base. We can't continuously seek to fleece the top ten percent. Now just to show I'm not one dimensional in my thinking, I've continued to lobby against the notion that having a ultra low Zero to 15% capital gains rate will reverse the decline of America. A few Conservatives need medication for their Capital Gains OCD. Some liberals need medication for their tax, spend and giveaway OCD.

The linchpin hinges on America's ability to expand taxpaying middle class jobs again.



The Internal Revenue Service uses percentile categories (Top 1%, 95% – 99%, 90% – 95%, etc.) for purposes of analyzing income tax data. A total of 141,070,972 tax returns were filed by individuals in 2007.

The IRS analyzes tax return statistics to determine various percentages. For example, this table indicates that the top 10% of taxpayers paid $794 billion, which accounted for 71.2% of the total income taxes paid by individuals in 2007.

This shows just how progressive a burden is put on upper income earners. One might even gasp with amazement if one saw the tax revenues collected from homes and sales taxes broken down buy income group too.

It will be interesting to see the results for 2008 and 2009 during the Great Recession.

Taxes, even among those who pay no federal taxes, always generates much heated discussion. It's always easy to look at those earning jumbo sums of money and say they can afford to pay any and all taxes.

But seeing how dependent America is on so thin a tax base, makes it even harder to reduce our government debt. I'd rather see more people earning more, who in turn will pay more tax. Building on a broader base (with the upper end never having to pay more than 35%) would be more idea for rich, middle-class and poor alike.

I also found this on IRS.gov Tax Stats at a Glance for 2007

It shows a summary of Collections Before Refunds by Type of Return, FY 2007

This table shows 138,893,908 individual income tax returns that collected $1,366,241 million. This means an additional 2,177,064 returns where filed and rebated $266 Billion. If I remember correctly, the budget in 2007 was $2.8 Trillion. This means the individual income tax was only 39.3 percent of the budget. Corporation income tax was only 14 percent. Employment(FICA)taxes were 30 percent.

Since high earners have their social security taxes capped and many say consumers pay corporation taxes as well as sales taxes, some people say taxes are more evenly spread across the population than simply comparing who pays the most federal income taxes. Still I've got to believe the annual real-estate taxes on those multi-million dollar first and second homes plus sales tax on those million dollar yachts, more than make up for any cap on social security tax.

Any thoughts on the current tax system? Should we raise the marginal tax rate up to 39.5% or cap the top federal tax rate at 33% and just have FICA taxes on incomes up to $250,000? Anyone from another country wish to trade tax systems?

Note: In 2007 no earned income above $97,500 paid FICA taxes of 3.5%. Today FICA has gone up to 4.7% on wages up to $106,800.