If you filed your federal income taxes this fiscal year, you’re part of the roughly half of all Americans who will pay almost $1.8 trillion to the IRS this year. This doesn’t count property taxes or corporate taxes – just the stuff that vanishes from your paycheck.
The federal government has already collected $695 billion in individual income taxes this fiscal year. That doesn’t count the people who will file on or past the April 18th deadline.
Americans under 40 pay about 40 percent of all federal income taxes, according to the AARP. This means that under-40’s have already paid an estimated $278 billion this fiscal year. It’s a hefty tax, but still a relatively small slice of the pie considering the size of our generation.
The Tax Foundation puts this in perspective: “millennials file 1 out of every 3 tax returns, earn 1 out of every 6 dollars in income, and pay 1 out of every 13 dollars in taxes.”
This is somewhat of a mixed blessing: Yes, we pay a disproportionately low federal income tax. However, we pay those lower tax rates because we are making less money. We’re young, and so are our careers.
Help Us; We’re Poor
Millennials filed half of all the smallest tax returns (reporting income less than $25,000) back in 2013, the latest year with available data.
Millennials pay the most where they make the most, with some exceptions. Young people in Virginia, New York, and California generally pay more in income tax than their peers. This is to be expected, given the center of government (D.C.), business (NY), and innovation (CA). However, Portland, Oregon and Honolulu, Hawaii also stand out as tax hot spots. Several cities in Colorado also crack the top 20 list.
Federal income tax today looks almost nothing like it did when it was instated 104 years ago. Back in 1913, the very highest individual income tax rate was 7 percent. Now, the lowest federal income tax rate is 10 percent — and it reaches all the way up to a maximum of 39.6 percent.
The average American’s federal income tax rate is 13.5 percent, simply because so many Americans pay no federal income tax at all. If you’re paying the IRS anything at all, you’re probably paying far more than 13.5 percent.
Numbers, how do they work?
A whopping 70 percent of millennials say that wealthy Americans pay too little in taxes. However, the top 50 percent of earners in America pay almost 97 percent of the federal income tax. The other half pay less than 3 percent.
Democrats are 33 points more likely to believe this than Republicans. To put that in context, young Democrats say that a group paying 97 percent of the total still isn’t paying its fair share.