Do the rich pay their fair share?
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Athan Clark
Few topics stir as much debate as income taxes. “The rich don’t pay their fair share” is a claim repeated so often that it has become a cliché.
What counts as a “fair share”? Ultimately, that’s a matter of philosophy and perspective. Some would argue fairness means that everyone pays the same amount, some argue the same percentage of their income and still others believe higher earners should pay disproportionately more—sometimes much more.
Milton Friedman said, “There is no objective standard of ‘fairness.’ ‘Fairness’ is strictly in the eye of the beholder.”
Practically speaking, for a strong economy, tax policy must also encourage people to work, save, and invest. Let’s not forget that higher taxes don’t just transfer money to government—they also discourage the very work and risk-taking that create prosperity and opportunity in the first place.
So without going deep into moral philosophy, we can instead look at the actual data.
How progressive is the federal tax code?
The truth is that the U.S. federal tax system is highly progressive. High-income households not only pay more in raw dollars but also shoulder a greater share of the overall tax burden. Whether that is “fair” or not is a matter of opinion, but the numbers themselves are clear.
A progressive tax system means tax rates rise as income rises. The United States follows this structure through its graduated income brackets, and the outcome is striking:
* According to the IRS, the top 1% of earners pay more than one-quarter of all federal income taxes, with an average tax rate of about 25%.
* The top 10% pay more than 70% of the total.
* The top half of taxpayers pay about 97% of all federal income taxes. The bottom half, by contrast, collectively pay about 3%.
On average, lower-income households face much lower effective tax rates. The Tax Foundation points out that the bottom half of earners pay roughly 3% of their income in federal income taxes, compared to nearly 25% for the top 1%.
In other words, the more someone earns, the higher percentage of their income goes to federal income taxes.
Why the perception gap?
If the federal tax code is already progressive, why do many believe the opposite? Part of the answer is that other taxes—such as payroll taxes for Social Security and Medicare—are flatter and feel more burdensome for middle-income workers. Others point to capital gains or the complexity of deductions.
But when we focus on the federal income tax, which is the subject of most “fair share” debates, the data are consistent: higher earners pay both more in absolute dollars and a higher share relative to income—by a lot.
Many provisions criticized as “loopholes” were written deliberately by Congress for a social benefit—for example, deductions for home mortgage interest or charitable contributions. They reflect policy choices, not accidents in the code.
The flat tax trend in the states
While Washington’s system remains strongly progressive, many states are moving in a different direction. Georgia is among a growing number of states that have adopted a flat income tax.
For decades, Georgia had multiple income tax brackets with a top rate of 5.75%. Starting in 2024, that changed to a flat rate of 5.39%, with reductions to 5.19% this year and scheduled annual reductions moving forward.
Georgia is not alone. States like Arizona, Iowa and North Carolina have also moved to flat tax systems in recent years. Policymakers argue that a flat rate offers several advantages:
- Simplicity — One rate is easier for taxpayers to understand and comply with.
- Transparency — Everyone pays the same percentage of their income, without the complexity of multiple brackets.
- Competitiveness — In a low tax region of the country, Georgia’s flat, low rate helps retain and attract workers and businesses.
- Growth — Economists often argue that flat tax systems reduce disincentives for earning or investing more.
Critics caution that flat taxes remove some progressivity at the state level. But Georgia’s system still exempts a large portion of income from taxation, providing relief for lower-income earners. While all Georgians pay the same rate on their taxable income, those who earn more money will necessarily pay more in taxes–meaning those earning the highest incomes still pay the most taxes. And it exists alongside the highly progressive federal system.
Two levels, two approaches
Together, these two approaches—progressive federal taxes and flat state taxes—illustrate how different levels of government can balance their roles. At the federal level, the system is clearly designed to be progressive, with higher earners paying disproportionately more. At the state level, Georgia has chosen simplicity and a more pro-economic growth stance by moving to a flat rate.
So, do the rich pay their “fair share”? Do people in the bottom half of the income distribution pay their “fair share”? What about the middle class? Well, that all depends on how one defines fairness.
What can be said with confidence is that the federal income tax system is already heavily progressive: higher earners not only contribute the most dollars but also pay a greater share of their income in taxes. By looking at the data and understanding the differences, taxpayers can form their own opinions about what fairness really means.
Athan Clark is the Communications Manager at the Georgia Public Policy Foundation.
