A: 84% & minus 2%. Q: Percent of individual income taxes paid by top 20% and bottom 20% of Americans (actual for 2014)

Previously mentioned the percent of income taxes (excluding payroll taxes) projected to be paid in 2015:  A: 48% & 0%. Q: Percent of individual income taxes paid by top 1% of taxpayers and bottom half (projected for 2015).

Here are actual numbers for 2014 for income taxes paid. Again, this is income tax only and excludes payroll taxes and excise taxes. The data is for quintiles of income. Each bracket of 20% of Americans includes about 65 million people. This is not based on tax returns.

A broad definition of income is used, including what is on tax returns plus employer paid health insurance, muni bond interest, and retirement income.

The info is from the Wall Street Journal article Top 20% of Earners Pay 84% of Income Tax, which cites data from the Tax Policy Center.

Here’s the data, ranked by quintiles, with percent of total U.S. income, and percent of total income tax paid:

  • Quintile           income   tax paid
  • Top 20%          51.3%  83.9%
  • Above ave       20.0%  13.4%
  • Middle 20%     14.8%   5.9%
  • Below ave         9.3%   (1.0%)
  • Bottom 20%      4.5%   (2.2%)

The 65M people with the top 20% of income (a cutoff of $134,000) pay 84% of all income taxes.

The 65M people with the bottom 20% of income (a cutoff of $24,200) are paid by the U.S. government an amount equal to 2% of total income taxes paid.

How is that possible? There are various income tax provisions that refund an amount even if a person doesn’t have any taxable income.

According to the article, the top 1%, with an income cutoff of $615,000 have 17.1% share of total income and pay 45.7% of total income tax. There are 3 million people in this bracket.

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