What The T@X! Episode #6: Who Pays Federal Income Tax?

A small percent of US tax payers pay roughly 70% of all federal income tax.

With just seven weeks left in the presidential campaign, Mitt Romney’s efforts to recast his campaign were derailed. The conventional wisdom is that the “47 percent” comment hurt so much because it played directly into the stereotype of Romney as an out-of-touch rich guy that President Obama and his campaign were playing up.

Although the leaked footage made Romney seem out-of-touch with the average American voter, his words were in-fact true. At the time roughly 47 percent of Americans paid no federal income tax.

In fact, the top 10% of income earners paid roughly 70% of federal income taxes collected and the top 1% paid nearly 40%.

In 2015 alone the federal government collected 40% of it’s revenue from just 5 states. To put this into perspective, the federal government collects more tax revenue from the state of California than the bottom 25 states combined.

So who exactly pays taxes, where is the tax revenue coming from and why does the federal government collect so much revenue from such a small portion of the population living in a handful of states?

Photo Copyright: <a href='https://www.123rf.com/profile_ayo88'>ayo88 / 123RF Stock Photo

Jeremias Ramos is a CPA working at a nationally recognized full-service accounting, tax, and consulting firm with offices conveniently located throughout the Northeast. Jeremias specializes in tax and business consulting with focus areas in real estate, professional service providers, medical practitioners, and eCommerce businesses.

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