Bud Hunt's Site

Middle Class Pays Majority Of Federal Taxes


By Terence P. Jeffrey


Middle-class Americans — not the rich or the poor — pay the majority of annual tax revenues
taken in by the federal government, according to data released in a new Congressional Budget
Office (CBO) study. Households earning less than $34,300 per year, meanwhile, actually pay a
negative average federal income tax rate.


According to the CBO:

  • Middle-class households that earned between $34,300 and $141,900 paid 50.5 percent of all
    federal tax revenues in 2007 (the most recent year analyzed).
  • Households that earned between $34,300 and $352,900 paid 66.7 percent of all federal taxes.
  • Households in the top 1 percent for annual income (those earning more than $352,900) paid a
    healthy 28.1 percent of all federal taxes.
  • Households in the lower income brackets paid relatively little; those earning less than $34,300
    paid only 5.2 percent of all federal taxes, and those earning less than $20,500 carried almost
    none of the federal tax burden (just 0.8 percent of the total) in 2007.

Other findings:

  • The average overall federal tax rate (including income, Social Security, Medicare, excise and
    other taxes) for all American households was 20.4 percent in 2007.
    But the average rate rose dramatically as household income rose.
  • Households earning less than $34,300 paid an average overall federal tax rate of 10.6 percent,
    while households earning more than $74,700 paid an average overall federal tax rate of almost
    two and a half times that much — 25.1 percent.
  • The average federal income tax rate for households earning less than $34,300 was -0.4 percent
    in 2007, and the average federal income tax rate for households earning less than $20,500 was
    6.8 percent.

Over the past three decades, according to the CBO data, taxation has been getting more
progressive, as the tax burden has lightened on lower income households while increasing on
higher income households. During those three decades, Presidents Ronald Reagan and George W.
Bush signed laws cutting the top marginal income tax rates, but Presidents George H.W. Bush
and Bill Clinton signed laws increasing the rates.


The CBO divided the 116.9 million American households of 2007 into five roughly equal parts
(quintiles) graded by income. The income range for the lowest quintile was $0 to $20,500; the
second quintile, $20,500 to $34,300; the third quintile, $34,300 to $50,000; the fourth quintile,
$50,000 to $74,700; and the fifth quintile, $74,700 and above. The share of overall federal
taxes paid by each of the first four quintiles decreased from 1979 to 2007, while the share
of overall federal taxes paid by the highest-income quintile increased, meaning the overall
tax burden was shifting away from that class of Americans making less than $74,700 per year
in 2007 toward those earning more.


Visit The Source.

Print Friendly

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll To Top