Where Do You Rank as a Taxpayer?

Job-killing tax hike. Millionaire surtax. 9-9-9. The widening gulf between rich and poor. Class warfare. Occupy Wall Street. The 99% versus the 1%. As the battle over income inequality and taxes rages in Washington and spills into the streets, know how you compare with your fellow citizens when it comes to the income you make and the taxes you pay.

By Kevin McCormally, Editorial Director, Kiplinger.com

October 13, 2011

Start with the fact that in the two years since the end of the Great Recession in June 2009, the inflation-adjusted median income of American families has fallen 6.7%, to just under $50,000. And this comes in the shadow of a government bailout of big banks and a return to the days of gigantic bonuses on Wall Street. Mix in stubbornly high unemployment, a volatile stock market and a barely recovering economy, and it’s no wonder that anger over the causes and consequences of the financial meltdown is packing presidential debates with heated rhetoric and filling the streets with protestors.

Undoubtedly, there are big issues here. And we think it’s important for you to know where you fit in. Does your income put you in that at once extolled and excoriated 1% of richest Americans? In the bottom 50%? Somewhere in between?

And, while Warren Buffet says he thinks rich folks like himself should pay more taxes -- and President Obama would be glad to oblige with a millionaire surtax -- Republican presidential candidate Herman Cain wants to throw out the tax code altogether and replace it with a 9% flat tax on individuals, a 9% corporate tax and a 9% national sales tax.

It makes you wonder: Are you bearing your fair share of the nation’s tax burden? Do you have a clue what portion you pay now?

To help answer such questions, we have developed a tool to show how the nation’s taxable income and the country’s tax bill are distributed among its citizens. Are the wealthy coddled with tax favors? Is the middle class unfairly burdened? Our tool uses the latest IRS data to shine a bright light into what are too often murky shadows. We’ll also show you how your own income stacks up with that of your fellow Americans.

Are you ready to see where you fit in? With our simple calculator, enter a single number from your 2010 tax return and you’ll instantly know the answer.

What the numbers show

The latest numbers from the IRS -- based on 2009 tax returns -- show what it takes to be among the top 1% of income earners: adjusted gross income of $343,927 or more. The 1.4 million Americans with this elite status reported 16.9% of all the country’s taxable income.

That’s right. One percent of taxpayers reported almost 17% of all taxable income. But that same tiny group also kicked in 37% of all the taxes paid.How much do you need to make to be in the top 50% of earners? Just $32,396.

Fall below that level and you are in the bottom half, along with nearly 70 million of your fellow taxpayers. All told, that group earned just 13% of the income reported on 2009 tax returns. And they coughed up 2.25% of all the income taxes paid.

Use our calculator to see if you’re in the top 1%, 5%, 10%, 25%, 50% . . . or bottom 50% of income earners.

Our income and tax-burden breakdowns come from information reported on 2009 individual income tax returns. Income categories are based on adjusted gross income.

(Note that these figures include only federal income taxes. According to one study, more than half of all wage earners pay more in Social Security and Medicare taxes than they do income tax. The percentage of those paying more payroll tax than income tax soars to nearly 90% if you count both the employer and employee share of those levies.)

For historical perspective, back in 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation’s individual income tax bill.

It makes you wonder: Are you bearing your fair share of the nation’s tax burden? Do you have a clue what portion you pay now?