IRS Says $32,000 Qualifies as Wealthy
Citizens earning more than $32,879 rank amongst the wealthiest half of U.S. taxpayers and paid more than 97 percent of all income taxes in 2007, according to new IRS data released this past week. The data also shows the top 1 percent paid more than 40 percent of all income taxes while earning less than 23 percent of national income.
This one percent of taxpayers paid an effective tax rate of 22.45 percent. That is nearly double the 12.68 percent effective tax rate paid by the average citizen. For comparison, the bottom 50 percent of taxpayers paid an effective tax rate of 2.99 percent.
In South Carolina, a citizen earning $30,000 is wealthier than 3 out of 4 state taxpayers. This includes public school teachers earning the state average salary. A plumber or registered nurse earning $64,000 per year ranks amongst the top 10 percent of taxpayers. This small number of citizens was responsible for 60 percent of the income taxes collected.
Proposals to reduce the state income tax are commonly characterized as tax breaks for the rich at the expense of ordinary South Carolinians, but these examples illustrate many citizens that consider themselves ordinary are actually the wealthy taxpayers being discussed when tax policy is debated.
South Carolina€™s tax tables are not fully indexed to inflation, which results in the top marginal rate of 7 percent kicking in at the relatively low level of $13,351. This 7 percent rate is effectively the highest in the Southeast since the top bracket applies at lower levels than neighboring states.
South Carolina Income Tax Quick Facts
- South Carolinians earning more than $30,000 rank amongst the wealthiest 25 percent of state taxpayers
- Citizens earning more than $30,000 paid nearly 85 percent of all state income taxes
- $64,000 in annual income ranks a citizen within the top 10 percent of state income
Who Pays South Carolina State Income Tax?
State Income Tax Burden Tax Paid Share of Income
Top 1% (Above $340,000) 24.8% 22.1%
Top 5% (Above $93,000) 44.6% 41.5%
Top 10% (Above $64,000) 60% 54.7%
Top 25% (Above $30,000) 84.9% 79.6%
Top 50% (Above $8,700) 97.8% 88.1%
Bottom 50% (Below $8,700) 2.2% 11.9%
Source: S.C. Dept. of Revenue
Who Pays Federal Income Tax?
Federal Income Tax Burden Tax Paid Share of Income
Top 1% (Above $410,096) 40.42% 22.83%
Top 5% (Above $160,041) 60.63% 37.44%
Top 10% (Above $113,018) 71.22% 48.05%
Top 25% (Above $66,532) 86.59% 68.71%
Top 50% (Above $32,879) 97.11% 87.74%
Bottom 50% (Below $32,879) 2.89% 12.26%
Source; Internal Revenue Service