WaEx: Last week, the IRS released its annual Statistics of Income. This much-anticipated document is exactly what it sounds like: a thorough analysis of taxpayers’ incomes and payments to the IRS, this time for 2018.
Each year, these numbers are illuminating for a number of reasons. For one thing, they show the progression of tax payments over time. For example, revenues have continued to rise since the Tax Cuts and Jobs Act lowered income tax rates for everyone. And the number of filers taking the mortgage interest deduction plummeted from 33 million in 2017 to just 13 million in 2018, as more taxpayers took advantage of the new and far more generous standard deduction.
There are also important lessons about income classes. Out of 147 million IRS tax filers in 2018, just 0.3% (about 500,000) had incomes above $1 million. These earners and families made 17% of all taxable income in 2018 (just shy of $1.5 trillion) and paid 28.6% of all income taxes. That is significantly more than they would pay in a strictly proportional system, and of course, it doesn’t count state or local income taxes or the business taxes that high earners often pay.
Meanwhile, the 85 million filers at the bottom of the pay scale faced a justly and reasonably lower tax bill. Those reporting incomes of $50,000 or less (more than half of all filers) shouldered just 5.5% of the nation’s total income tax bill. read more
This is good news, all tax hikes accomplish is to decrease the flow of cash to the government. If they need less money taxes can godown.