Feb. 16, 2015

Do the rich pay their fair share of taxes? That’s the very question that Lee Ohanian, an economics professor at UCLA, tackled in a new course for Prager University, revealing some fascinating statistics that he says dispel the myth that the wealthy aren’t paying enough into the tax system.

Ohanian began by noting that defining two elements is essential before fully understanding the issue: who, exactly, qualifies as rich and how “fair” should be defined. 

“According to 2011 data, a top 10 percent house makes around $150,000 per year in gross annual income [before deductions and taxes],” he said, noting that the top five percent consists of people making $190,00 and above.

Ohanian said the top one percent consists of people making $500,000, and above and that the proportion of those who make millions and billions is actually “very small.”

Then, the professor defined what he believes is “fair” when it comes to taxation. 

“Fair would seem to be that the group of taxpayers who earn 10 percent of the country’s income would pay 10 percent of the country’s taxes,” he said, noting that this doesn’t end up happening in practice. “According to IRS data, the top 10 percent of all earners pay 71 percent of all federal income tax, while earning only 43 percent of all income.”

Even the top one percent, he said, pays 37 percent of all federal income tax, while only earning 17 percent of it.

His conclusion: “If anything, the top 10 percent pay more than their fair share.” 

Ohanian also dove into the payroll tax as well, which deducts money for Social Security and Medicare, arriving at similar conclusions.

“To say the rich, however you might define them, don’t pay their fair share is simply wrong,” he concluded.

Watch him break it all down below: