Rep. Alexandria Ocasio-Cortez donned an elegant gown with the slogan “Tax the Rich” painted on the back at the Met Gala in New York, where guests selected by Vogue’s Anna Wintour ponied up around $35,000 a pop for tickets.
My first question is: Who doesn’t want to “tax the rich”? Judging from my social-media feed, there seems to be a growing segment of people under the impression that the wealthy pay little or nothing in taxes. When you ask Americans if they support a wealth tax, a majority support the idea. One recent poll found that 80 percent of voters were annoyed that corporations and the wealthy don’t pay their “fair share.”
Polls rarely ask these people what a “fair share” looks like. Is a quarter of someone’s earnings enough? A third? Because the rich have been shouldering an increasingly larger share of the cost of government.
The United States already has one of the most progressive tax systems in the free world. Those who make over $207,350 now pay 35 percent in income tax. Those who make $518,400 or more pay a 37 percent income-tax rate. At some point, taxation should be considered theft.
Despite perceptions, the highest-income strata of taxpayers are the only ones who pay a larger share of taxes than their share of income. In 2018, the top 1 percent of income earners made nearly 21 percent of all income but paid 40 percent of all federal income taxes. The top 10 percent earned 48 percent of the income and paid 71 percent of all federal income taxes.
On the other hand, in 2021, Americans making less than $75,000 are projected to have, on average, no federal income tax liability after deductions and credits. The average income-tax rate for those making between $75,000 and $100,000 is expected to be 1.8 percent. More than 61 percent of Americans — around 107 million households — owed zero federal income taxes for the year 2020.