What millionaires pay in taxes

Jennifer Collins Jan 24, 2012

Adriene Hill: After a whole lot of back and forth on the campaign trail. Republican Presidential Candidate Mitt Romney has released his tax returns. In 2010 he paid just about 14 percent in taxes to Uncle Sam. Most millionaires write checks for closer to 25 percent.

Marketplace’s Jennifer Collins ran the numbers, and give us a little perspective.

Jennifer Collins: It’s all about how you make your money. Mitt Romney’s returns show he makes most of his income from investments.

Joseph Thorndike of Tax Analysts says investors who own stocks and bonds are taxed at a much lower rate than —

Joseph Thorndike: Say an entrepreneur who started a business but takes a salary he’s paying a much higher rate on that income than Romney is on his.

The working rich fall into the highest tax bracket. Some might be taxed at 35 percent so, Thorndike says.

Thorndike: People who might be angry are other rich people.

The average person pays effectively only 11 percent of his or her income in taxes.
Martin Press has been a tax lawyer in Florida for a while.

Martin Press: I’ve practiced tax long enough that I’ve become a tax historian.

He says our progressive tax system comes from our culture.

Press: We have a system like that because we believe people who earn more money should pay a larger percentage of that income in tax.

It’s just how big that percentage is that might be in question.

I’m Jennifer Collins for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.