Breakdown of Taxes Paid by Income Group

The breakdown of wage-earning taxpayers by group and the percentage of total federal income tax they contribute varies based on factors such as income level, tax brackets, and overall distribution of wealth. The U.S. tax system is progressive, meaning that higher earners pay a larger percentage of their income in taxes. However, the contribution of each group (by income level) to the overall tax system is not evenly distributed. Here's a rough overview:

1. Top 1% of Earners

Income Threshold: Roughly those earning over $540,000 annually (as of recent years).
Percentage of Total Income Tax Paid: This group pays a large portion of the total federal income tax, often reported to contribute about 40% to 45% of all federal income taxes collected.
Effective Tax Rate: This group typically faces an average effective tax rate around 30% to 35% (combined federal income taxes and other taxes).

2. Top 5% of Earners

Income Threshold: Around $250,000 to $540,000.
Percentage of Total Income Tax Paid: The top 5% typically contributes about 55% of federal income taxes.
Effective Tax Rate: This group generally has an average effective tax rate around 25% to 30%.

3. Top 10% of Earners

Income Threshold: About $160,000 and up.
Percentage of Total Income Tax Paid: The top 10% contributes roughly 70% to 75% of the total federal income taxes.
Effective Tax Rate: The effective tax rate for this group ranges from 20% to 25%, depending on specific income and deductions.

4. Middle 40% of Earners

Income Range: Generally, people earning between $45,000 and $160,000.
Percentage of Total Income Tax Paid: The middle 40% of earners pay around 20% to 25% of total federal income taxes.
Effective Tax Rate: These individuals typically face a 15% to 20% effective tax rate.

5. Bottom 50% of Earners

Income Range: People earning under $45,000 annually.
Percentage of Total Income Tax Paid: This group contributes around 5% to 10% of federal income taxes. Although they may pay payroll taxes (Social Security and Medicare), their federal income tax burden is significantly lower, and some may even receive refunds through credits like the Earned Income Tax Credit (EITC).
Effective Tax Rate: For this group, the effective tax rate is generally 10% or lower or even negative due to credits and deductions that offset their tax liability.

Summary of Tax Contribution by Income Group:

Top 1%: ~40-45% of federal taxes.
Top 5%: ~55% of federal taxes.
Top 10%: ~70-75% of federal taxes.
Middle 40%: ~20-25% of federal taxes.
Bottom 50%: ~5-10% of federal taxes.

These figures reflect federal income tax contributions and do not account for state or local taxes, which can vary widely by region. Additionally, payroll taxes (Social Security and Medicare) are somewhat regressive, meaning they take a higher percentage of income from lower earners, but these aren't included in the breakdown above.

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