New Trump Tax Act May Burden Salaried Americans, Spark MAGA Base Debate

Latest Household Consumption Survey should act as a wake-up call

- BY T N ASHOK

The commonly held belief that the middle class in the U.S. pays more taxes than wealthy millionaires on average is not absolutely incorrect if one looks at the way the tax is structured in favour of investors and against fixed income groups.

The wealthy pay a higher percentage of their income in taxes: that's about 16% and the fixed income group pay 15% of their income on the average. But investors have a greater amount of access to tax benefits in a way the salaried classes do not have. So the rich eventually pay less. The wealthiest 10% of households, with incomes of at least $169,800, pay about three-quarters of the nation's total tax bill.

The top 1% pay the highest effective federal tax rate, at 25.9%, though this rate has declined over time. When considering state and local taxes, popularly known as SALT, the wealthiest can pay over 45% of their annual income in taxes, and potentially upwards of 60% with taxes paid abroad.

Middle-income families have a lower effective tax rate: Those in the middle income bracket pay about 26% of their income in taxes on average. This range is even narrower for many, falling between approximately 5% and 13% for middle-income families.

The top 0.1% may pay a lower tax rate than other groups: Some analyses suggest that the wealthiest 0.1% (those with at least $3.8 million in annual income) may have a slightly lower effective tax rate (25.7%) compared to the top 1% (25.9%). This can be due to various factors, including the type of income they receive (e.g., lower-taxed capital gains) and access to tax strategies.