Fat wallets bear largest tax burden

WASHINGTON — Here is some consolation for the lower and middle classes on Tax Day: the wealthy in America pay much higher percentages of their overall earnings in taxes and provide the lion's share of all taxes collected.

That's according to a report released Wednesday — just before today's deadline for federal income tax returns — by the Joint Economic Committee chaired by Sen. Bob Bennett, R-Utah. It probably was not much comfort to Bennett, who is a multimillionaire.

"The more an individual or family earns, the greater percentage of their income they pay in taxes," the report says, based on Internal Revenue Service data for 2001.

For example, the highest-earning 20 percent of taxpayers received 46 percent of the nation's personal income — but they pay 83 percent of all income taxes. In other words, they "earn less than half of all income, but pay more than four-fifths of all federal income taxes," the report said.

The report says the richest of the rich bear "an even more disproportionate share of the income tax burden."

The highest-earning 1 percent of taxpayers receive 14 percent of all the nation's income but pay 34 percent of all the federal income taxes, "more than double their income share," the study said.

Meanwhile, the poorest fifth of American workers (who earn less than $16,300 a year) actually pay less than zero percent of the nation's taxes — minus 2 percent to be exact. That is because child tax credits and the Earned Income Tax Credit provide them with more in refunds than they actually paid in taxes during the year.

The second-poorest fifth of earners (who receive less than $27,600 a year) also pay zero percent overall of the nation's taxes thanks to such credits, the study said, while that group earns 12 percent of the nation's personal income.

"Collectively the bottom 40 percent of earners thus pay little or nothing in income taxes. Like all taxpayers, however, they do face the time, frustration and monetary costs of preparing their taxes and complying with the complex tax code," the study said.

The third-poorest fifth of Americans earns 16 percent of the nation's income but pays just 5 percent of taxes. The second-richest fifth earns 22 percent of all income but pays just 14 percent of the taxes.

The report noted that because the rich pay most of America's taxes, "federal revenues devoted to general government operations are particularly sensitive to changes in the income of the top earners."