Income Tax Inequality: Do the Rich Pay Too Much?

Recently, concerns about economic inequality have risen to the forefront, as minimum-wage protests against McDonald's , Walgreen , and other employers have highlighted the tension between the rich and the poor. But when it comes to income taxes, one report suggests that the highest-income Americans bear more than the entire income tax burden for the nation.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the Congressional Budget Office report, which says that the the 40% of Americans with the highest income paid 106% of the total income tax burden in the most recent year for which data were available. Dan explains how that's even mathematically possible, as the lowest 40% of income-earners actually get net money back on their income taxes because of the earned income tax credit. When you look at other taxes like payroll withholding from paychecks, even the poor end up paying something. But Dan notes that the top 40% still pay 86% of the tax, further observing that those disparities make sense given similar disparities in the total amount of income each group earns.

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The article Income Tax Inequality: Do the Rich Pay Too Much? originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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