Monday, April 13, 2009

U.S. wealthy - how much tax do they pay?

This is a recurring theme in newspapers and the blogosphere. We note this new fact sheet from Citizens for Tax Justice in the U.S., which has crunched the numbers.

"One complaint we often hear is that Americans who work hard and become successful have to pay over a third of their income in federal income taxes. But a recent report from the Internal Revenue Service (IRS) shows that this is not remotely true. . . in 2006 (the latest year for which data are available), the 400 richest income tax filers paid just 17.2 percent of their adjusted gross income (AGI) in federal income taxes. That is down from 22.3 percent in 2000, and is less than half of the top statutory income tax rate of 35 percent. Almost 65 percent of the income reported by those 400 taxpayers consisted of capital gains and dividends subject to the preferential rates."

With a couple of extra tidbits on the 400 wealthiest:
  • Although 400 returns are less than 1/1000th of a percent of the total individual tax returns filed, these 400 taxpayers collected almost 8 percent of the total preferential-rate capital gains and dividends in the nation in 2006.
  • These 400 taxpayers paid income taxes averaging $45 million in 2006. As a share of AGI, their tax bills averaged 17.2 percent.
  • This decline from 22.3 percent to17.2 percent represented a total tax cut of $5.4 billion in 2006 for this group, or an average tax cut of over $13 million each.
CTJ add this fact sheet looking at the whole income spectrum, which includes the following observation:

The total federal, state and local effective tax rate for the richest one percent of Americans (30.9 percent) is only slightly higher than the average effective tax rate for the remaining 99 percent of Americans (29.4 percent).

Which shows that the tax system is hardly progressive at all.


Blogger ebreen said...

It is unfair to conflate capital gains tax rates with regular income tax rates. Most industrial governments have decided to lower tax on capital gains in order to encourage capital investment which is recognized as a social good. Economists on both the left and right have observed that increased real income from labor is a result of capital investment. It should be no surprise that the 400 richest would have more investment in capital ventures that generate gains...after all having capital to invest is what it means to be rich. An injustice to society would be a tax structure that encourages the holder's of capital to horde that wealth in assets that to do not increase productivity or create jobs..such as buying gold or holding real estate...farms and vinyards that operate at no or little profit and generate no taxes but likely recieve subsidies.

2:24 pm  
Anonymous Anonymous said...

indeed, the ones that have been treating humans as wild beasts, profitting from daddy's Swiss bankaccount for CENTURIES, are the ones tighting the knot. America's next targets for WAR: Switserland, Seychelles and Cyprus...
They've never worked in their whole life, pretend to care about the 'normals and the sick' but will never pay taxes. Heck, even the American FDA is beeing ridiculed in Europe these days. Why not make it worse, dear Americans.....

9:12 am  
Anonymous Anonymous said...

why dont you start a revolution? You sound like you have alot of info and i agree and believe most of it. i see this economy staying in the dumps for years to come.

Thomas Jefferson stated, the country should have a revolution every 20 years to prevent government from becomming to powerful.

Well, that hasnt happened and look where we are at.

8:32 pm  

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