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Tax Breaks

How Do You Rank as a Taxpayer?

New government data show a growing income gap between rich and poor. But the rich are paying an even larger percentage of total taxes. See where you stand.

The population of the United States passed 300 million in October. So how does your income stack up against the growing numbers of your fellow citizens? New statistics show that an income of $31,121 or more puts you in the top half of all income earnings. The top-earning 50% pays 97% of all federal income taxes.

The rich are richer than ever before, and there is a growing gap between rich and poor. But the rich also are paying a larger percentage of taxes. The highest-earning 1% of taxpayers in America make 19% of all income reported to the government, a substantially bigger share than the 13% of total income earned collectively by the lowest-earning 50% of workers.

A much wider discrepancy shows itself -- in reverse -- when it comes to the portion of individual income taxes paid. That top 1% of earners pay 37% of all the federal individual income taxes collected. The bottom 50% of earners pay just 3% of those taxes.

In 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation's individual income tax bill.


These income and tax burden breakdowns are based on information reported on 2004 individual income tax returns, the latest which have been analyzed by the government. Income categories are based on adjusted gross income (AGI), which is basically salary plus investment, rental and business income minus investment losses and expenses such as alimony paid, contributions to retirement plans, moving expenses and a few other costs.

How does your income stack up? What percentage of the nation's tax burden falls to you and your fellow citizens in your income category? Kiplinger has developed an on-line calculator to quickly show you. To use the calculator, click here.

The following table shows the income categories and the percentage of income earned and tax burden paid by each category.

Income Category 2004 AGI Percent of all income Percent of income taxes paid
Top 1% Over $328,048 19% 37%
Top 5% Over $137,500 33% 57%
Top 10% Over $99,111 44% 68%
Top 25% Over $60,040 66% 85%
Top 50% Over $30,121 87% 97%
Bottom 50% Under $30,121 13% 3%

Source: IRS