Top 50% of Wage Earners Pay 96.09% of Income Taxes

The IRS released the year 2004 data for individual income tax returns. The numbers illustrate a truth that will startle you: that half of Americans with the highest incomes pays 96.09% of all income tax. The top 1%, who earn 20.81% of all income covered under the income tax, are paying 37.42% of the federal tax bite.

*Data covers calendar year 2004, not fiscal year 2004 - and includes all income, not just wages, excluding Social Security

Less than four dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners. The top 50% were those individuals or couples filing jointly who earned $26,000 and up in 2003. (The top 1% earned $293,000-plus.)

Here are the wage earners in each category and the percentages they pay:

Share of Income:

• Top 1% - Earn 19% of all income
• Top 5% - Earn 33% of all income
• Top 10% - Earn 44% of all income
• Top 25% - Earn 66% of all income
• Top 50% - Earn 85% of all income
• Bottom 50% - Earn 3.00% of all income

Share of Total U.S. Federal Income Tax Bill:

• The top 1% pay 37% of all Federal Income Taxes
• The top 5% pay 57% of all Federal Income Taxes
• The top 10% pay 68% of all Federal Income Taxes
• The top 25% pay 85% of all Federal Income Taxes
• The Bottom 50% - pay just 3% of all Federal Income Taxes

Bottom Line: When you hear that tax cuts only benefit "the rich," it is because for the most part, they are the only ones actually paying taxes, so they are the only ones who can actually receive a cut.

In 2004, 32.4% of Americans paid no Federal Income Tax.

2006 IRS Data