61% of US citizens paid no income tax in 2020 (per the Tax Policy Center).
Of the actual taxpayers, the top 1% paid 24% of income taxes collected. The top 20% paid 64% of income taxes collected.
These are the facts.
So, when someone tries to tell you that the ultra wealthy are not paying income tax, they are flat out lying to you.
Do you know how they mislead you?
It is actually quite easy.
They discuss the “1%” or “ultra wealthy” based on their net worth and NOT on their real, actual income.
For example, Jeff Bezos may be worth billions… on paper. But, if he only takes home $50,000 annual salary, that is what he will pay income taxes on (after netting out the standard or itemized and dependent deductions, of course).
Why is this important to know?
Your “net worth” is what everything you own is worth if you converted it all to cash right now.
As you know, a house can burn down, be blown away, or be left to rot until it eventually falls.
That company with the high priced stock could go bankrupt and be worth nothing.
You could wreck your expensive car… or it could flood… or be set on fire during a protest.
Your trusted business partner could empty your bank accounts and company assets and relocate to a remote island.
In other words, until you convert your assets to cash, they only have the potential to be worth something.
That is what those hating on the “1%ers” are conveniently forgetting.
Now, do the wealthy exploit tax loopholes? You bet they do. And so does anyone who has a savvy tax accountant.
Rental properties, small businesses, government-sponsored retirement accounts, investments, children, and higher education are all very popular tax loopholes that allow you to reduce your tax bill… legally.
The question is: Would you rather be part of the 1% paying more income taxes than 90% of the population or part of the 61% who pay nothing?