The taxes Americans really pay, in two graphs

at 03:14 PM ET, 04/16/2012

Even poor Americans pay taxes. They’re just not paying federal income taxes.
Gallup finds that a slight plurality of Americans think their taxes are “about right.” Almost everyone else thinks their taxes are too high. In particular, “low-income adults appear to be the least satisfied with what they pay in taxes.”

This presents a bit of a puzzle. You’ve surely heard that 60 percent of Americans pay no federal income tax at all (see this post for more on that). Many low-income Americans, in fact, get money back on their federal income taxes, as they qualify for the Earned Income Tax Credit. It seems a bit churlish to complain about your tax burden when you’re either paying nothing or coming out ahead.

But when we focus on the federal income tax, we miss all the taxes that low-income Americans do pay. The payroll tax, for instance. And state sales taxes. And lots of local taxes. Indeed, Citizens for Tax Justice, a left-leaning tax policy group, produces a study every year showing the total tax burden for different groups once federal, state and local taxes are taken into account. And when you include all the taxes people pay, then, as you can see in the graph atop this post, it turns out that most Americans do pay taxes, and they in fact pay about as much as the rich.

Another way of looking at the data is to look at the total share of taxes different groups pay in relation to their total share of national income. And here, again, it’s mostly even, with the rich paying a smidge more, and the poor paying a tad less:

So if you take into account the total tax burden, most everyone is paying, and they’re paying surprisingly similar effective rates. And it’s easy enough to understand why someone struggling to make it on $30,000 a year would chafe at paying 25 percent to the tax man in a way that someone cruising along at $500,000 wouldn’t.

Related: Why half of Americans pay no federal income taxes

Correction: This post initially stated the CTJ data didn’t include corporate taxes. It does. The post has been edited to reflect that.

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