American taxpayers get a bad rap, and sometimes unfairly so. In 2024, the nonpartisan Tax Foundation conducted a poll of 2,700 U.S. taxpayers aged 18 years and over, and discovered that 65% of American taxpayers think the U.S. Tax Code is overly complex, while 86% think it needs to be reformed.
They also think their own taxes are generally too high (65%), which isn’t a huge surprise. (How often do you meet someone who wants to pay more taxes?) Arguably most important of all, though, is the fact that most taxpayers surveyed think they don’t get “value” from the U.S. government, commensurate with the amount of income tax they pay.
(I’d even include myself in that latter group, but I digress).
Where the Tax Foundation’s survey goes awry, however, is in its effort to increase the clickability of its article reporting on its findings. I’m most upset, in fact, by a subheading in the article alleging that “tax literacy [is] low among U.S. taxpayers.”
Because in fact, the numbers don’t really back up that statement.
Taxpayers know more than you give them credit for
On the three out of four questions leading off the survey, for example, the most popular answer among respondents was actually the right answer.
Asked: “Suppose your income places you in the 22% bracket, how much of your income do you think is taxed at a rate of 22%?”, 48% of respondents correctly answered “just some of it.”
Asked: “Do you agree or disagree with the following statement: Large tax refunds are a good thing?”, again 48% of respondents disagreed with the statement, correctly surmising that the only way one gets a large tax refund is if the IRS withheld too much income from their paycheck in the first place, denying them the chance to earn interest on that money, and keeping all the interest for itself!
And asked: “What tax rate applies to the top U.S. federal income tax bracket?”, 33% correctly answered “37%.” (Granted, they probably Googled before answering this one, but nobody said that was against the rules).
As it turns out, only on one question did most U.S. taxpayers (maybe) fumble the answer. Asked: “How much do you think the top 1% of taxpayers by income account for in terms of share of total federal income taxes paid?”, only 22% correctly guessed “42%” was the answer. 78% of the rest of those polled got the answer wrong one way or another, or simply didn’t know the answer.
19% of respondents declined to guess. Of those who did, and goofed, 22% of respondents guessed “1%”, which was way off. 12% overshot the market by guessing “64%.” The most common answer “12%”, was guessed at by 25% of respondents.
This would sound kind of fair if it were true, 1%-ers paying a lot more than their “fair share,” but not an exorbitant amount. But in fact, it’s not true at all.
It depends on what the meaning of “income,” is
Turns out, for all the “eat the rich” rhetoric of America’s progressive left, we’re already picking much of the meat off the bones here in the U.S. of A., if 1% of taxpayers are paying 42% of the taxes.
But are they?
It kind of depends on what you consider “income tax.” 1% of taxpayers may pay 42% of income taxes, strictly defined. But what about all the other taxes we all pay, other than “income” taxes? What about social security contributions? Contributions to Medicaid and Medicare? What about capital gains, which are also a kind of income?
Try as I might, I’ve never been able to track down a study that clearly lays out the total tax burden, per income strata, of overall tax payments in the United States, nor even a more limited answer to who pays what percent of all federal taxes, income, social security, Medicaid and Medicare, and capital gains. No one seems to know. No one seems to have ever asked.
But maybe someone should.
Maybe, if someone does ask, we’ll finally get some better answers to our tax surveys. That should make everyone happier, maybe even the nonpartisan Tax Foundation included.
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