Fact Check: High-income taxpayers ARE paying their fair share
Progressive Democrats and President Biden think they’re going to pay for the multi-trillion-dollar reconciliation omnibus spending package by convincing everyone that higher-income Americans and corporations are not paying their “fair share.”
“Fair share” is red meat for their base, fueling the view rich Americans and corporations are paying less than low-income taxpayers. In 2018, 144.3 million taxpayers reported earning $11.6 trillion in adjusted gross income (AGI) and paid $1.5 trillion in individual income taxes. Here are some facts:
IRS data indicates that the wealthy in America are bearing the heaviest share of the income-tax burden than in any time in recent memory.
Taxes actually paid, as a percentage of income earned and received in transfer payments, rise steadily from 5.1% in the bottom quintile of households to 39.6% in the top 1%.
More than 53 million low- and middle-income taxpayers pay no income taxes after benefiting from record amounts of tax credits.
The Congressional Budget Office shows that the share of income taxes paid by the top 1% of taxpayers in 2018 reached a near record high of 41.7%.
American businesses pay or remit 93% of the nation’s taxes.
Publicly traded multinationals overall have steadily increased the domestic share of their worldwide profits from 48% in 2017 to 56% in 2020.
Almost 61% of Americans paid no income taxes in 2020 thanks largely to the substantial tax cuts enacted in various COVID-19 relief bills and the drop in personal incomes during the pandemic. That number, according to the Tax Policy Center, will likely fall to 57% this year and continue to hover around 45%, if the temporarily expanded tax credits such as the Child Tax Credit are made permanent.
Are some companies and individuals not paying their fair share? Certainly, and those one-offs should be addressed (perhaps by congressional clarification of a bloated tax code). But let’s not forget there are also many people out there who reduce their tax liability by giving away much of their wealth, not by not reporting income, and many companies are reducing their tax burden through investment and job growth.
It’s easy to cherry-pick anecdotes and then push a broad-brush narrative to make your case. At the heart of it, the Biden Administration and the progressives should not be assuming that taxpayers as a group are committing fraud.
Republicans are willing to work with Democrats to find pragmatic solutions to increase housing stock, better serve people with mental illnesses, and address other social needs. But the Biden Administration, Nancy Pelosi, and the Bernie and Squad-led Socialist wing of the party -- need to stop trying to fund their agenda by pushing the false narrative that high-income Americans need to take on a greater burden.
--Sarah Cunningham, RMSP President and CEO
This post ran in our Oct. 14 Heard on Main Street newsletter. You can subscribe to this weekly publication at the bottom of our home page.