Not so overburdened

A letter from Joe T. Tucker raises the issue of tax rates across income groups, apparently commiserating with high-income taxpayers’ tax burden.

The figures that Tucker cites, from the Pew Research Center, are based on figures provided by the Internal Revenue Service in their “Statistics of Income” report. The income figures are based on what is reported on individual income-tax returns, something called “adjusted gross income,” or AGI. But AGI omits many significant sources of nontaxable revenue sources, e.g., municipal bond interest, employer contributions to retirement plans, other nontaxable fringe benefits, etc.

A more serious flaw is that the analysis only considers federal individual income taxes. It omits payroll taxes (e.g., Social Security) as well as all state and local taxes. An analysis by another group, the Institute on Taxation and Economic Policy, includes a broader measure of income as well as a broader range of taxes. The results, by income (low to high) and tax rate (taxes as a percent of income): Lowest 20 percent of taxpayers by income pay a 19.1 percent tax rate; second-lowest 20 percent of taxpayers: 23.1 percent; middle 20 percent of taxpayers: 27.5 percent; fourth 20 percent of taxpayers: 30.8 percent; next 10 percent of taxpayers: 32.3 percent; Next 5 percent of taxpayers: 33.0 percent; next 4 percent of taxpayers: 33.4 percent; highest 1 percent of taxpayers: 34.1 percent. The overall rate is 31.1 percent.

The top 1 percent, with average income of $1.8 million, pays 3 percent more of their income than the average taxpayer. One possible interpretation is that “the rich” are not overburdened compared to their less well-off taxpayers. MIKE WATTS Little Rock