While President Trump is being criticized for requiring certain able-bodied food stamp recipients to work, volunteer, or participate in qualifying education or training to continue receiving benefits, liberals and socialists across the country are calling on the government to “tax the rich,” a demand echoed by politicians such as New York Mayor Zohran Mamdani.
In Congress, Senator Bernie Sanders and Representative Ro Khanna have introduced the Make Billionaires Pay Their Fair Share Act, which would impose a 5 percent annual tax on the net worth of the country’s roughly 938 billionaires. The United States currently has no federal net-worth tax; the proposal would tax accumulated wealth rather than income.
When Elon Musk was named Time’s Person of the Year in 2021, Senator Elizabeth Warren said he should “actually pay taxes and stop freeloading off everyone else.” That same year, Musk said he would pay more than $11 billion in taxes, reportedly the largest individual tax bill in U.S. history.
The top 1 percent of earners already pay 38.4 percent of all federal income taxes, while the bottom fifth of households has an effective federal income tax rate of negative 11 percent. Yet the Sanders–Khanna bill would send $3,000 to every member of households earning $150,000 or less, including the bottom 20 percent already living off government handouts.
The federal government collected a record $5.4 trillion across all federal tax categories, not just income taxes, in fiscal year 2026, which ended September 30, according to the Treasury Department’s final statement. Spending reached $7.4 trillion, leaving a deficit of about $2 trillion.
Federal revenue comes primarily from individual income taxes, payroll taxes, and corporate income taxes, with smaller amounts from tariffs and other sources, according to the CBO.
The wealthy’s contribution extends beyond federal income taxes. The top fifth of households paid 70 percent of the major federal taxes analyzed by CBO, and the top 1 percent alone paid 26 percent, according to its most recent distribution data. The lowest-income 20 percent of households paid close to nothing in net federal taxes, received the largest share of welfare spending, and did almost no work.
Higher earners pay the overwhelming majority of federal income tax dollars. The top 10 percent of filers paid 70.5 percent of the total in 2023, while the bottom half paid just 3.3 percent, according to an NTU analysis of IRS data.
Payroll taxes also generate more dollars from higher wages, because the same 7.65 percent rate applies to every dollar up to the Social Security wage cap, and the Medicare portion has no cap. Wealthier households are more likely to own businesses and pay employer payroll taxes for multiple employees. The Federal Reserve’s consumer finance survey found that nearly half of families in the top 10 percent by income owned a privately held business, compared with 14 percent in the bottom half.
A business with 10 employees earning $50,000 each pays $38,250 annually in employer payroll taxes, in addition to the amounts withheld from employees’ wages. By contrast, households in the bottom fifth of the income distribution generally are not employers creating jobs and paying payroll taxes for a workforce.
Corporate income taxes also fall mainly on the wealthy through their ownership of businesses and investments. The top 1 percent by wealth held 50.2 percent of all corporate equities in the third quarter of 2025.
Wealthier households also bear more tariff costs in dollars. The Yale Budget Lab estimated that tariffs cost the highest-income tenth of households about $2,175 annually, compared with $517 for the lowest-income tenth, more than four times as much.
The estate tax applies only to very large estates. Beginning in 2026, the federal estate tax exemption rose to $15 million per person, adjusted for inflation. Estate tax returns filed in 2024 reported more than $23.3 billion in net estate tax, according to the IRS.
On the spending side, the main means-tested welfare programs cost about $1.06 trillion in fiscal year 2026, roughly one-seventh of all federal spending. These include Medicaid, food assistance, Supplemental Security Income, refundable earned income tax credits, and housing assistance.
The benefits flow overwhelmingly to lower-income households. In 2014, the bottom 40 percent received about three-quarters of all means-tested benefits, while the top 1 percent received just 0.2 percent, according to CBO data.
In 2023, the bottom fifth received an average of about $19,800 per household in means-tested benefits while paying about $140 in net federal taxes, according to the CBO report. The second fifth received about $9,900 in benefits and paid about $6,000 in federal taxes. The middle fifth and every group above it paid more in federal taxes than they received in means-tested benefits. Households in the top fifth paid an average of about $106,000 in federal taxes.
Employment also differed sharply. Bureau of Labor Statistics survey data for 2022 show an average of 0.4 earners per household in the bottom fifth, compared with 2.1 in the top fifth. Annual wages averaged just $4,149 per household in the bottom fifth.
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