The answer depends on which country you live. In the United States, the rich not only pay their “fair” share, they pay more. Even stronger, wealthy American citizens pay more than the wealthy in any other country. The place to be, if you are rich and want to sock it away unimpeded by the tax man, is Poland.
Scott Hodge, at the Tax Foundation, put together testimony to the United States Senate’s Budget Committee, which featured a table from the Organization for Economic Cooperation and Development (HT HotAir). This table attempts to show just how much the rich pay in taxes as a share of their wealth in each of 30 developed countries.
I say “attempts” because the data, which is “based on OECD income distribution questionnaire,” must have some amount of error to it. For one, this is data at the household and not individual level (it is easier to mislead with the former statistics). However, the general trend is probably correct (assuming the representatives of each country filling out the forms were not overtly lying, exaggerating, or otherwise dissembling).
Hodge put the data (from 2008) in tabular form, but it works better as a graphic:
The horizontal axis is the percent share the richest 10% in each country pay in taxes. The vertical axis is the percent “share of all market income earned by that group”: it is an estimate of how much the top 10% is really worth. It is obviously imperfect; but the hope is that it is roughly, “on average”, correct.
Now, if we define fair as the top 10% paying the same as their true worth, than the heavy dark line indicates fairness. For example, in the USA the top 10% pay 45.1% of all taxes, but their net worth (or market share) is just 33.5%. If taxes were fair (via this definition), the top 10% would only pay 33.5%.
The rich in Switzerland, Iceland, Belgium, Sweden, Denmark, Japan, Norway, Austria and Germany pay their fair share. I mean, they are close to the dark line. The rich in Poland pay less than their fair share.
There are three dotted lines labeled 10%, 20%, and 30%. Countries falling near these lines pay that much more than their fair share. For example, the rich in France pay 10% more than their fair share. The rich in America pay more than the rich in any other country. Here, they pay 35% more than their fair share.
Besides measurement error, a natural criticism is that the influence/benefit value of money is not linear. That is, it is possible to argue that a household that has a share of wealth of $1 million is more than 10 times more influential/has higher benefits than a household with a share of wealth of $100 thousand. Since the developed countries tend to lie on line different than the “fair” line, it appears most governments make an argument similar to this.
But even if this is true—even if the rich are better off than their share of taxes indicate—it is still true that rich citizens of the United States pay more than rich citizens anywhere else. I repeat: the rich pay more here than anywhere else. And not only more, but much more. This puts the frequent calls to “Make the rich pay their fair share!” on shaky ground.
Further, the burden is on those who make this cry to define exactly, precisely, definitely what they mean by fair.
Last April 15, we looked at what percent share of taxes the top 1% in America pay (we’ll do the same this year). The graph shows that the rich are steadily paying a larger and larger share of taxes in the USA (the data, from the IRS, goes to 2007).
This picture shows the share of taxes the “poor” pay in taxes: it is correspondingly less and less each year. It is the case that—at least for income taxes—the bottom 40%-45% of earners pay nothing.
One definition of fairness is that everybody who is a citizen of a country (or every household), and who receives the benefits thereof, should pay something, even if that something is a pittance. If we use this definition of fairness, then the tax system in America is not fair.