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Issue 7:
Taxes

How much do Americans pay in taxes? How would each candidate reform taxes for Americans?

How much do Americans pay in income taxes?

The amount of income tax collected from individuals and corporations has changed over the years due to factors like the economy, tax laws, and population size.

Percent Change in Income Taxes
and Federal Tax Rates

In 2011, the government collected $1.1T in income taxes, a 27% increase since 2002.

Sources: #1 #2

Your tax rate is what percentage of
your income you have to pay to meet
your tax obligation.

Based on income, here are the
rates for 2012:

Single*  Married (Joint Filing)
Married (Separate Filing)
Head of Household**

* Unmarried, Divorced, or Legally Separated

** Unmarried With at Least One Dependent and Responsible for 50% or More of Household Expenses

Sources: #1

There are different types of income tax
that we pay:

  • PAYROLL TAX:

    Employers withhold the payroll tax
    on behalf of their employees, and both
    state and federal authorities collect it in
    some form, such as Medicare and Social
    Security taxes.

  • INDIVIDUAL INCOME TAX:

    Also known as a personal tax, income taxes apply to all earnings: salary, gains on the sale of stock, interest on bank accounts and retirement plan distributions.

  • CORPORATE TAX:

    Levied on the profit earned by a
    business, with different rates for
    different levels of profits.

  • ESTATE TAX:

    Levied on an heir’s inherited portion of an estate if the value of the estate exceeds a value of $5 million.

Sources: #1

Which type of taxes provided the most revenue in 2012?*

Payroll Taxes  Individual Income Taxes
Corporate Income Taxes  Other**

* includes; excise taxes (3%), estate and gift taxes (0.4%), customs duties (1%), miscellaneous (4%)

** 2012 estimated total revenues

Sources: #1 #2

Is There a Difference Between Taxes for the Rich and the Poor?

The types of federal taxes individuals pay (and in what proportion) differs greatly based on income level.

Under $17K  $17–$33K  $33–$59K
$59–$103K  $103–$533K  Top 1%

Sources: #1

To get a snapshot of total tax burden of income groups, it’s important to also factor in state and local taxes, which can vary widely across the country. What’s the total average tax burden that Americans pay?

Total Tax Bill Percentage
(Local, State & Federal) by Income Group
Sources: #1 #2

Globally, taxes are used to fund government services, including healthcare, defense, pensions, and more. Each country’s services are different, as are the tax rates needed to pay for them.

Single*  Married Couple**  % of GDP***

*Average Income Tax Rate, With No Dependents

**Average Income Tax Rate, With Two Children (Two-Earner Married Couple: One at 100% Average Earnings and the Other at 67% Average Earnings)

***Taxes As % of Gdp, 2010

Sources: #1

Who is the “47%”? Who is the “1%”?

Recently, Americans who don’t pay income tax have received a lot of attention after Romney’s now infamous remarks about the “47%.” Here’s how the “47%” breaks down.

Low Income  Elderly
Working Poor & Children
Other Benefits

Americans who earn too low of an income, have children, or are elderly can receive benefits that lower their tax owed to zero.

Sources: #1 #2

The top 1% of Americans had an average minimum adjusted gross income
of $343,927, with the top 1% of them
making $960,000.

  • 1.4 million households qualify to
    be in the 1%
  • Collectively, their adjusted gross
    income was $1.3 trillion
  • The top 1% earned 17% of the
    national income
Sources: #1 #2

The Candidates on Tax Reform:

Sources: #1 #2 #3 #4 #5 #6 #7