Another study just out from the Congressional Research Service looks at taxes paid by different income groups and concludes—surprise!—that some people with seven-figure incomes have a lower percentage of their income going to taxes than that paid by people earning less than $100,000.
Specficially, the study as reported in the Washington Post shows that about one-fourth of all taxpayers earning $1 million or more annually take a lower overall federal tax hit, percentage-wise, than many households earning less than $100,000.
Those ultra-high earners had an overall federal tax burden of around 24%, which was lower than the percentage paid by about 10 million of the filers with adjusted gross income of under $100,000.
The main reason why the tax rate on “more” is less: Some of the highest-earners get a substantial portion of their income from dividends and capital gains, which are taxed at a top rate of 15%, regardless of how much you rake in. Working stiffs may pay a top tax rate of 25%, 28%, or higher.
I’m not saying it doesn’t pay to work. But from a tax standpoint, profits from capital are currently more favored than income from labor.