The top 1 percent (taxpayers with AGI of $546,434 and above) earned 20.1 percent of total AGI in 2019 and paid 38.8 percent of all federal income taxes. In 2019, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined.
The Tax Burden for Middle-Income Filers
Data from IRS breaks down taxpayers into just two groups: the top 50% of earners and the bottom 50%. In 2019, the top 50% accounted for more than 96% of the income taxes paid while the lower 50% demographic contributed just 3.06% of taxes paid that year.
According to Saez and Zucman, it's not only the bottom 50% of households who pay more — which include many in the middle class — it's also those in the upper-middle class and in the top 1% who pay more in taxes than those in the 0.1% do.
Taking into account all taxes, almost every adult in the United States qualifies as a taxpayer. Overall, the tax system is moderately progressive; rich people pay a higher percentage than poor people, but almost everyone pays substantial amounts.
Most low-income households do not pay federal income taxes, typically because they owe no tax (as their income is lower than the standard deduction) or because tax credits offset the tax they would owe. Some receive substantial rebates via refundable tax credits.
The analysis from OMB and CEA economists estimates that the wealthiest 400 billionaire families in America paid an average of just 8.2 percent of their income—including income from their wealth that goes largely untaxed—in Federal individual income taxes between 2010 and 2018.
Tax income from investments like income from work.
Billionaires like Warren Buffett pay a lower tax rate than millions of Americans because federal taxes on investment income (unearned income) are lower than the taxes many Americans pay on salary and wage income (earned income).
The main reason the top 400 pay such a low tax rate is that a very large share of their income is in the form of unrealized capital gains—appreciation in the value of their assets, mostly stocks and other business interests.
You pay more in taxes. Income earned by single people is taxed at a higher percentage than the income of married people filing jointly with a similar tax table.
So who is in the middle class? Broadly, Pew Research Center defines middle-class households as making two-thirds to double America's median income. That adds up to an income range of about $30,000 to $90,000 for single Americans in 2020 dollars.
Billionaires have avoided taxation by paying themselves very low salaries while amassing fortunes in stocks and other assets. They then borrow off those assets to finance their lifestyles, rather than selling the assets and paying capital gains taxes.
In 2018, the latest year for which data is available, those earning between $500,000 and $1 million paid a tax rate twice as high, on average, when compared with taxpayers earning between $100,000 and $200,000. Taxpayers earning between $2 million and $5 million paid 27.5%, the highest of all taxpayers.
In California, high earners are taxed 9.3 percent plus an additional 1 percent surcharge on income over $1 million (this, and all millionaire taxes, are over and above the standard federal tax rate that applies). On the opposite coast, New York's upper class is taxed 8.82 percent on income over $1,077,500 in 2019.
If you are single and a wage earner with an annual salary of $50,000, your federal income tax liability will be approximately $5700. Social security and medicare tax will be approximately $3,800.
Heads of households earning less than $18,800 (if under 65) and less than $20,500 (if 65 or older) are also exempt. If you're over the age of 65, single and have a gross income of $14,250 or less, you don't have to pay taxes.
Bezos' wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.
Jeff Bezos' net worth increased to $197 billion in 2021 from $131 billion at the beginning of last year. This indicates a rise of $74 billion in a year, which means that he gained around $7 billion every month last year, which translates to $1.75 billion per week or $250 million per day.
The average net worth needed to be considered wealthy and to be financially comfortable both rose from last year's survey. In 2021, Americans said they needed $624,000 in net assets to live comfortably, while it would take $1.9 million to be rich.
In the US, an annual salary between $70,000 – $78,000 before tax ($5,800 – $6,500 monthly) is considered to be a good wage in any state.
Getting married and staying married for the long-term brings the opportunity for more financial security, provided that each spouse practices good family financial rules. Don't spend more than you have and limit—or eliminate—the use of credit cards.