A new study further debunks the widely-held conservative notion that lower-income Americans pay little-to-no taxes while the rich shell out more than their fair share.
CTJ looked at the effect of federal tax increases on the wealthy passed as part of the fiscal cliff dea at the beginning of the year. The increase was roundly decried by Republican leaders and some on the right who viewed the move, pushed by President Barack Obama, as a step toward socialism.
However, while the recent changes put federal income tax rates on a more progressive scale -- tax rates go up as income goes up -- many other taxes Americans are subjected to, like federal payroll taxes and state and local taxes are actually regressive, meaning they take a bigger share of income from the poor and middle class than from the rich, according to CTJ.
The system is "just barely progressive," the report concludes after adding up all the taxes Americans pay, including federal income taxes, payroll taxes, state and local taxes, and others. In 2013, the richest one percent of Americans will pay 24 percent of the country’s total taxes while bringing in about 22 percent of the nation’s income, according to the report. At the same time the bottom fifth of earners will pay 2.1 percent of America’s total taxes and take home 3.3 percent of total income.
The findings could have consequences for closing the nation’s widening income gap. The U.S. tax system is less progressive and has done less to reduce income inequality than the tax systems in Germany, Poland, Japan and a variety of other countries, according to a Brookings Institution report from last year.
The CTJ report’s findings pound yet another nail in the coffin of Mitt Romney's now-infamous remarks that 47 percent of Americans are receiving the government’s benefits without paying their fair share in taxes.
While it's true that many of the nation’s poorest pay no federal income taxes, the CTJ report found that all Americans are actually paying taxes at a rate much closer to their share of America’s income pie by including other more regressive taxes -- like federal payroll taxes as well as state and local taxes -- and income that may not be reported to the IRS in their calculations.