“The Distribution of Household Income and Federal Taxes, 2013” was published by the Congressional Budget Office last week. The report measures income taxes among financial demographics. One of the main question is, of course:

How much are the 1% paying?

Results

 

The average taxes on the upper percentile of taxpayers are the highest they have been since 1997, with a 5% spike since 2008. Of course, in 2013, the US introducted the Affordable Care Act and the American Taxpayer Relief Act of 2012 (fiscal cliff deal) which both include higher income taxes for the wealthy. One of the key results is the top 1% of households paying an average of 34% of their income in federal taxes.

The Presidential Election

 

What do our candidates think of increased taxes for the wealthiest 1%? The answers are as diverse as this year’s field:

Donald Trump feels that the highest earners are paying way too much and wants to reduce the average tax rate of the 1% would drop from 34% to 20%.

Hillary Clinton feels that the highest earners are close to paying what they should and would moderately raise the tax from 34% to 35%.

Bernie Sanders feels that the 1% are still getting away with no paying as much as they should and would raise the average to 46%.
These are three radically different outlooks on the recent data supplied to us by the CBO. Keep in mind, these numbers do not show the full picture of the three candidates tax plans, all of which are aimed at total tax reform.

Given the importance of this election, and the differing tax plans among this year’s candidates, the CBO report is certainly worth the read.