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Fri April 13, 2012
What America Pays In Taxes
Originally published on Mon May 7, 2012 4:26 pm
Last year, the federal government collected $2.3 trillion in taxes. Most of that came from two sources: Individual income taxes and payroll taxes.
Payroll taxes are deducted automatically from your paycheck, and paid in part by employers. Payroll taxes fund Social Security and Medicare.
Individual income taxes are what everybody is scrambling to file right now. Individual income taxes pay for most of what the government does other than Social Security and Medicare.
Quick rundown of the others: Estate tax comes from large inheritances; corporate tax is paid by corporations (obviously); and "other" includes customs duties, excise taxes on products such as gasoline, and everything else.
Here's how federal taxes fall on households across the income spectrum.
This chart is based on data compiled by The Tax Policy Center in this table. A few somewhat wonky notes on the data:
The income numbers are for total cash income, rather than adjusted gross income. This PDF discusses the distinction between the two.
Taxes paid combines income, payroll, estate and corporate taxes. It assumes that corporate taxes come out of profits that would otherwise have gone to shareholders.
If you leave out corporate taxes, the rate paid by top earners falls significantly. (Most corporate profits go to the top earners.) But tax rates still tend to be higher for those with higher incomes. You can see that trend in this table.
Correction: The second graphic above has been revised. It previously displayed federal taxes from a year other than 2011.