Gummy Bears and M&Ms Explain How Tax Brackets Work

The U.S. tax system isn’t intuitive. We may know what we personally pay in taxes, but have little idea what earners in other tax brackets (say, the richest of the rich) pay as a percent of their income. According to a 2017 poll conducted for NPR, what Americans know about the tax system is “limited and at times contradictory.”

Our tax system is somewhat progressive—meaning, theoretically, people with more money pay more taxes—but it’s not really that simple. The Wall Street Journal’s Richard Rubin uses candy to break it down in a way that's easy to digest:

Each color gummy bear represents taxpayers in a specific income bracket, and the green M&Ms represent all of the U.S. income generated in a year. You can see that a single gummy bear—representing the top 1 percent of earners—takes home 15.3 percent of U.S. income, or more than the entire third-lowest tax bracket (made up of many more gummy bear taxpayers) does. However, the few people that are represented by that blue gummy bear are worth more than just their yearly income, since they likely have stocks and other assets that are rising in value but aren’t taxed until they’re sold.

The yellow M&Ms represent income taxes. That blue gummy bear group pays 38 percent of America’s income taxes. In contrast, the bottom 40 percent of taxpayers gets money back on their taxes. When you look at the piles of M&Ms, it doesn’t look very fair.

But when you add in the red M&Ms of payroll taxes, which fund Social Security and Medicare, you see that that blue gummy bear group pays much less than most other taxpayers: just 5.2 percent. The only group that pays less in payroll taxes is the lowest income bracket. The middle income brackets, by contrast, pay more in payroll taxes than their share of the country’s total income.

Is it a fair system? It depends on who you ask. Congress is expected to begin working on a major tax overhaul this fall, focusing largely on cutting taxes. As you sort through the news, you may want to break out the gummy bears again to see how it all stacks up.