Progressive income tax: Effective tax rate higher for top earners

After tax credits and deductions are taken into account, the effective tax rate for top earners is more than twice the national average – further proof that the tax burden is most definitely progressive.

Ben VanMetre
Senior Budget and Tax Policy Analyst

The argument that the rich don?t pay their ?fair share? is popular, but false. A recent report by the Tax Foundation, ?Putting a Face on American?s Tax Returns,? shows that after tax credits and deductions are taken into account, the effective tax rate for top earners is more than twice the national average ? further proof that the tax burden is most definitely progressive.

In summarizing the data, the report notes:

People mistakenly think that because the rich benefit from many popular tax credits and deductions they pay a lower average (or ?effective?) tax rate than other taxpayers. That is not the case. The average tax rate for all Americans is about 10.1%. However, taxpayers earning over $250,000 pay a 23% effective rate, more than twice the national average. Meanwhile, the effective tax rate for Americans making less than $30,000 is actually negative due to refundable credits.

It?s no wonder progressives in Illinois want to adopt a similar progressive tax structure to pay for the state?s out-of-control spending. Under Illinois? current flat rate income tax, Illinoisans with an annual base income of more than $1 million already pay an average tax bill that is 47 times higher than the average non-millionaire resident. Isn?t that enough?