This graph shows the average income reported to the IRS and the average taxes paid by the top 400, i.e. the 400 taxes returns with the highest adjusted gross income from 1992-2005. This does not represent not gains in the wealth of people like Bill Gates but instead shows the annual income of the superrich reported to the IRS. They accounted for 1.15% of total income reported in 2005, more than twice as large as their 0.49% share in 1995.
{Click on the image to take a closer look}
Data from the IRS via Wall Street Journal’s Tax Report
Technorati Tags: Tax Rates, United States, Income tax, IRS
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My oh My! Has Bush been good to the rich or what!
I loved cherry picked data, especially regarding taxes. At least the WSJ reported all the other things:
U.S. 303,764,673 population (http://www.census.gov/main/www/popclock.html).
400/303764673 = .0001% of the total population.
These 400 people:
- Earned 1.15% of all income. ($85.6 billion of 7.4 Trillion)
- Paid 1.67% of all federal taxes. (15.6 Billion of 934 Billion).
- Donated 3.7% of the total private charitable donations (7.38 billion of 199 billion: http://usinfo.state.gov/scv/Archive/2006/Jun/22-515647.html)
Though to truly put it in stark relief:
- The bottom 50% of all taxpayers was 50% of the US working population (66.3 million)
- The bottom 50% of all taxpayers (in 2005) made 13% of all income (963 billion of 7.4 Trillion)
- These 50% of taxpayers paid 3.07% of all federal taxes (28 billion).
- The average tax rate for the 66.3 million filers was 2.98%
(http://www.taxfoundation.org/news/show/250.html)
So, 400 people paid over half of what 66 million others paid in taxes. It’d be hard to determine the charitable rate of the bottom 50% of tax payers because the onerous tax code is too complicated for them to take the charitable giving deduction.
And then if you spend time to read the fine article from the WSJ, the key piece (which is quite reflected in your graph), is that the majority of their income is represented by capital gains (58% of their income). Add in the 6.7% of their income in taxable interest, and 6.9% in dividends, and you reach a 71% of these 400 people’s income coming from investments. So there’s the effective tax rate binder too. If 71% of their income is taxed at 15%. Clinton’s rate was 20%. In 2010, this will reset to 20%.
Lastly, remember that the US went into a recession in Q4 of 2001 after 9/11. So the cliff there at 2002 is the tax cuts dropping the capital gains tax to 15% to stimulate investment and spending.
Now, take your graph, and overlay the S&P 500 index chart from the same time period, you get a strikingly similar chart.
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my&l=off&z=l&q=l&c=
“Has Bush been good to the rich or what!”
This may come as a surprise to you, but the president doesn’t establish the tax code by decree. If you have any issue with tax policy, take it up with your congressman, whose entire profession is selling tax code manipulation for campaign contributions.
-jcr