What Percent of Income Does the Average American Pay in Taxes?

Taxes in the industrialized world take a large chunk of personal income. This is largely because the industrial and military state is expensive. The United States maintains a strong military presence in dozens of countries while running major debts and trade deficits. As a result, the top 20 percent of income earners in America pay over 70 percent of all taxes due at all levels — but even low income earners will pay their share of taxes as well.



The "New York Times" reported on April 8, 2009, that the average American paid 20.7 percent of all her income in federal taxes. This did not include state and local taxes. The highest 20 percent of income earners paid almost 26 percent of their income in personal federal income taxes, while making almost 56 percent of all income. The top 1 percent of Americans received a full fifth of all American income while paying 28 percent of their income in federal taxes.

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Income Taxes

The Tax Policy Center's calculations differ from the "New York Times" — only slightly. Tax Center researchers Rosanne Altschuler and Roberton Williams have figured that the average American pays 18 percent of his income in federal taxes each year. Those making over $1 million pay 27 percent of this each year in federal taxes. Using Gross Domestic Product as a basis, the Tax Center claims that Americans pay about 27 percent of the worth of the entire domestic American economy in federal taxes each year. This is fairly low compared with other industrialized states, which pay almost 36 percent of their own GDP in taxes each year. However, their personal income taxes are usually lower. The American government gets about 37 of its income through personal income taxes, while European states get about 27 percent.


Tax Freedom Day

The Tax Foundation developed a measure of how much the average American pays in taxes each year. Tax Freedom Day is the day when the worker has paid off all his tax debts and can now work for himself. Starting on January 1, Tax Freedom Day figures how many days an American must work to meet all his yearly tax obligations on all levels. In 2011, this day is April 12. In other words, the average American must work eight hours a day, five days a week from January 1 to April 12 to pay off tax obligations at the federal, state and local level. The latest tax Freedom Day was May 1, 2000. However, the Tax Foundation stresses that if the federal government did not borrow, and funded all its own spending through taxes alone, then, in 2011, Tax Freedom Day would not be until May 23.


Tax Freedom Day by State

Tax burdens are not the same throughout America. Using the Freedom Day method, The Tax Foundation has figured that the citizen of Connecticut did not pay off his total tax obligations until May 2, 2011. New Jersey was not far behind at April 29, while New Yorkers began working for themselves on April 24, 2011. Mississippi was the best tax state, since residents there completed their tax obligations on March 26 of 2011.