Who Pays, and How Much

David Wessel is The Wall Street Journal's economics editor. His column Monday was excellent and does not require a subscription to read. He really gets down into the actual numbers about who pays how much Federal taxes. His conclusions:

• The top 5%, top 1% and top 0.1% of Americans have been getting a bigger slice of all the income and paying a growing share of federal taxes.

• Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger—except for those whose income mainly comes from capital gains and dividends.

• The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income.


• The tax system narrows the gap between economic winners and losers, but not enough to stop the gap from widening.

Please read his reasoning for each of the above. I am particularly struck by the following Wessel quote:

Even in the better years of the mid-2000s, roughly 40% of households didn't pay any federal income tax.  Many did get hit by the payroll tax, which helps finance Social Security and Medicare. But about one-fifth of households didn't pay either federal income or payroll taxes; many did pay state and local taxes.

So if I understand Wessel, 40% of our citizens pay no income tax and 20% pay no federal tax whatsoever, income or payroll. That doesn't seem appropriate.

It is clear that all U.S. citizens garner benefits from the Federal government. Shouldn't they pay something in return, even a few dollars? Just so they understand that government costs money, that there is no free lunch.