Income Tax: Am I Paying My Fair Share?
Who should be paying more and who should be paying less?
I see a lot of commentary that the billionaires aren’t paying their fair share of income tax. What is their fair share? What is fair? What about the poorest among us? How much should they pay? What is fair?
What if we took our entire federal expenditures and divided it by the number of people in the U.S. We spent $7.1 trillion in 2025. There were estimated 341 million people in U.S. One might say that a person’s fair share is $20,821. I don’t want to get into silly arguments about the numbers. Even if off by a factor of 20%, the amount is somewhere between $16,000 and $25,000.
Based on that, I’m not paying my fair share.
Maybe that isn’t how we should look at fairness. I certainly don’t want to pay more tax.
It is easy to point to others and say they should pay more. How much more? What is fair?
The Tax Foundation provides an interesting table. Looks like the top 1% of earners, those with incomes above $663,164 pay 40% of total taxes paid. Yet they only represent 1% of returns filed. Does that seem fair?
What about the top 5%, those with incomes above $262,591, they pay 61% of total taxes. Is that fair?
Let’s look at the bottom 50%, those with incomes less than $50,339, they pay 3% of total taxes. Is that fair?
What about those at the very bottom of the economic ladder? I’ve often said the same people who want the rich to pay more, ignore the poor. Why should anybody who is under the Federal Poverty Level pay any tax? Is that fair? I don’t think so.
I looked up the history of the standard deduction. It was 10% of Adjusted Gross Income with a maximum of $1000 from 1944-1969. In 1970, it went up to $1,100, The Federal Poverty Level was about $2000 for a single person. It went up in 1970 due to the Tax Reform Act of 1969 and increased annually by a few hundred dollars per year.
The 1986 Tax Reform Act brought the standard deduction up to $3000, up from $2540, effective 1988. The Federal Poverty Level was $5,770.
By 2017, the standard deduction was $6,350. The Federal Poverty Level was $12,060. So, those making just under the poverty level were paying income tax on nearly half their income. Does that seem fair? I don’t think so.
Who helped? Due to the 2017 Tax Cuts and Jobs Act, the standard deduction was increased to $12,000. The Federal Poverty Level was $12,140. Those in poverty almost didn’t pay tax.
The 2025 OBBBA pushed the standard deduction to $15,750. The Federal Poverty Level was $15,650. Finally, those in poverty paid no tax.
While we might disagree on what is fair for the wealthy to pay, I hope we can agree that those who are below the bottom rung of the economic ladder shouldn’t be paying anything. Those who keep our focus on the wealthy, seem to neglect the poor.
Let’s focus on both ends!