Paying Their Fair Share?

Last month Bernie Sanders spoke on the Senate floor against a continuing resolution passed by the House, stating that it would “cut taxes for billionaires and slash funding for the working class”   He emphasized the growing wealth gap in the U.S., pointing out that since President Trump’s re-election, billionaires like Elon Musk, Jeff Bezos, and Mark Zuckerberg have seen their wealth increase by over $200 billion.  Sanders argued against cutting programs for working families to provide substantial tax breaks for billionaires.  And in a recent interview he again emphasized the need for the party to focus on policies that benefit the working class over the wealthy.

As a general rule it seems democrats want to increase taxes on the wealthy and corporations, to fund the government even though large corporations usually pass these costs on to the consumer.  Meanwhile, and also as a general rule, the Republican Party believes in prioritizing tax cuts arguing that it stimulates economic growth.  In effect, the term “paying their fair share” is subjective depending on the individual’s perspective on taxation and government spending.  So, I thought we might look at some hard numbers from the Internal Revenue Service.

The top 1% of earners (those with the highest annual incomes) typically pay roughly 40% of all federal income taxes while owning 30% of the wealth.  Meanwhile, the top 10% of earners (including the top 1%) pay roughly 70-75% of federal income taxes and control 65-70% of the wealth.  These numbers fluctuate slightly from year to year, but they are reflective of the progressive nature of the U.S. tax system, where higher earners pay a higher share of taxes.  We should also note that in 2023, the last year statistics are available, the median household income in the U.S. was $80,500.

~ Higher Incomes Are Taxed at Higher Rates ~

Meanwhile, there are three important factors to keep in mind regarding taxation – first, congress created the tax code and only congress can change it; secondly, the Democrat Party has controlled either or both the House and Senate 32 out of the last 44 years since 1980 (that’s 73% of the time) and third the U.S. tax system has a progressive structure, meaning that wealthier individuals always pay a higher percentage of their income in taxes.  Therefore, it’s not surprising that lower-Income households pay far less federal income tax as a percentage of their annual income; meanwhile, a significant portion of lower-income earners pay no federal income tax whatsoever due to deductions, credits (like the Earned Income Tax Credit), and exemptions.  ​In fact, 32% of all tax filers owed no federal income tax at all.

~ Effective Federal Income Tax Rates by Income Percentile ~

Effective tax rates represent the’ average rate’ at which income is taxed, considering all deductions and credits:

• Top 1%: Effective Federal Income Tax Rate: 26%.
• Next 4%: Effective Federal Income Tax Rate:  23%
• Next 5%:​ Effective Federal Income Tax Rate: 20%.​
• Middle 40%: Effective Federal Income Tax Rate: 12.7%.​
• Bottom 50%: Effective Federal Income Tax Rate: 2.0%.​

Additionally, when Sanders talks about republicans giving tax breaks to “their billionaire buddies” I thought we’d look to see how these rich folks voted – exact demographics vis-a-vis voting records aren’t available from the Census Bureau at this time, however predicated on the last presidential election these are the results from the ten wealthiest counties in the U.S.

1. Loudoun County, Virginia – Voted Democratic​
2. Santa Clara County, California – Voted Democratic​
3. San Mateo County, California – Voted Democratic​
4. Falls Church City, Virginia – Voted Democratic​
5. Fairfax County, Virginia – Voted Democratic​
6. Marin County, California – Voted Democratic​
7. Douglas County, Colorado – Voted Republican​
8. Howard County, Maryland – Voted Democratic​
9. Hunterdon County, New Jersey – Voted Republican​
10. Morris County, New Jersey – Voted Republican

Conclusion – Most of the wealthiest counties in the U.S. lean Democrat reflecting a trend where affluent, highly-educated suburban areas have increasingly supported Democrat candidates in presidential elections.  Only Douglas County, CO, and Morris County, NJ, voted Republican, though Morris County was closely contested.   No one questions that our fiscal issues are a result of both parties, and “fairness” is as much a sense of perspective as anything else, nonetheless, it’s always wise to look under the hood so to speak, and actually analyze and verify what the pontificating politicians are pandering about.

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