The president talks a lot about the fairness of the tax code, and the notion that people making over $1 million are undertaxed. So in this week’s chart, I look at the data from the Internal Revenue Service’s Statistics of Income to show the number of U.S. millionaires (specifically, people and households earning $1 million or more as reported by the IRS) and their relative contributions in paid income taxes.
In 2009, millionaires made up 0.1 percent, or just fewer than 240,000, of the 140 million tax returns filed that year. Despite their small demographic imprint, the magnitude of their contribution in paid taxes is hard to overlook. Over the past ten years, millionaires have paid 17 to 28 percent of total income tax returns per year.
The 233,435 taxpayers who reported earning seven digits or more in 2009 brought in a total of $702.2 billion, received $77.2 billion in personal exemptions and total deductions, and paid 25 percent ($176.4 billion) of their income in taxes overall. As you may recall, the top 1 percent of income earners pay 38 percent of income taxes and earn 20 percent of income, which makes our tax system highly progressive.
The returns filed in 2009 reflect income from 2008, the depths of the recession and financial crisis. As you can see from this data, although millionaires were not exempt from economic hardship, with a loss of 160,000 reported millionaires in 2008 and 2009 alone, millionaires still paid an overall 20 percent share of the income tax revenue. We can also see that millionaires are paying a slightly higher share of the income tax receipts than they were in 2001.
Finally, one thing you can’t see in this chart is where many of the millionaires come from. The assumption made by the people who spend time decrying the luck of millionaires and calling for much more taxes on them is that they were born with a silver spoon in their mouth and owe their millions to luck. And of course, some do (not that I see anything wrong with it). However, Daniel Foster’s report on millionaire Ted Leonsis’ outrage over the recent class-warfare language coming from the administration is a good example of how wrong this assumption can be. (Check out this Treasury report about income mobility.)
maybe you should include data from say, 1970-2000. Maybe that would put the "magnitude" of their contribution in clearer context?
Your graph doesn't really prove much to people arguing that their taxes have been too low SINCE 2001!!!
Reply to this commentLinkReport AbuseThe sad thing is that there are people who are so consumed with greed, that they actually think that having 0.1% of the population paying 20% of taxes is ipso facto evidence that they aren't paying enough.
Reply to this commentLinkReport AbuseYeah, how come it's not consider "greedy" to covet someone else's wealth?
Reply to this commentLinkReport AbuseWell that used to be called the "do not covet" provisions of the 10 commandments, which of course is so passe and since religiously based has no place in our public discourse so we must still complain about the wealthy paying more taxes than they used to. Just goes to show that liberals can be consistently fooled all of the time.
Reply to this commentLinkReport AbuseI guess it's ok to covet via the ballot box.
Reply to this commentLinkReport AbuseIf Reagan's 11th commandment was "Don't speak ill of another Republican," the Democrat 11th commandment is, "Thou shalt covet."
Reply to this commentLinkReport AbuseShorter Bobby: I can't argue your facts, so I'll argue against something else!
Reply to this commentLinkReport AbuseHere's your historical chart, Bobby, chew on it and choke.
External Link
Reply to this commentLinkReport AbuseExcellent chart, but Bobby's complaint doesn't even make sense on its own terms. In response to stats demonstrating what a heavy load high income earners are carrying today, he's complaining that the very tax system which produced this is coddling the rich??
What does screaming about the period prior to 2001, which had HIGHER tax rates, do to undercut anything argued here? Want to check out how the rich's share of the tax burden has only GROWN since the Clinton tax rates were in place, Bobby? Knock yourself out. External Link
Scroll down to Table 6, then tell us what your next half-*ssed complaint is.
Reply to this commentLinkReport AbuseSigh.....
Yes, the top 1% is paying a higher share of total income tax because they are earning a much higher share of total income.
But the percentage of income taxed by top earners is at a historical low.
Is that too hard to understand? Do you dispute these facts?
Reply to this commentLinkReport AbuseYou're going to make me go line-by-line with this, arent you? Click on the dam* link, and follow this:
First, look at Table 5, "Adjusted Gross Income Shares, 1980-2008". You'll notice that in 1980, the top 1% earned 8.46% of total income. Then, under those punishing 70% Carter tax rates - cross-check with Table 6, "Total Income Tax Shares, 1980-2008" - they paid 19.05% of total income taxes.
Fast forward to 1990, when the top tax rate had been cut to 28%. The top 1% earned 14% of income, and paid 25.13% of income taxes.
Then to the halcyon Clinton year, 2000. They earned 20.81% of income, and paid 37.42% of income taxes.
And now - drumroll! - under these horrible, repulsive, plutocratic Bush tax rates, the results? They earn 20% of income, and pay 38% of all income taxes!
Now, is this too hard for YOU to understand? Do you dispute any of THESE facts? If the higher earners are picking up an even greater share of taxes relative to their income today than in the Clinton years, what in the name of all that is good and holy are you complaining about? In what sense is this not progressive? Or, not a "fair share?"
Reply to this commentLinkReport AbuseI think this article from the Wall Street Journal will answer your questions.
External Link
Money Quote:
"In a new sign of increasing inequality in the U.S., the richest 1% of Americans in 2006 garnered the highest share of the nation's adjusted gross income for two decades, and possibly the highest since 1929, according to Internal Revenue Service data.
Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group's share of the tax burden has risen, though not as quickly as its share of income."
So it is not "fair" or "progressive" enough compared to historical norms in this country and current norms in other industrialized countries.
Any more questions?
Reply to this commentLinkReport AbuseColor me unmoved.
So, no matter what the absolute levels are, so far as you're concerned if there does not remain some mathematically pristine, unchanging ratio between shares of income earned and taxes paid, this by definition is not "fair?" Doesn't matter the high earners are carrying an extremely outsized load, it has to remain EVERY BIT AS outsized as it was in years past, else we're doing something wrong?
Further, the average tax rate which has been fluctuating for years in a relatively narrow range in the mid 20 percents, has to remain every year at the levels of some arbitrary benchmark - 1996? 1970? What? - else we likewise are not being "fair" and must raise marginal tax rates?
That's an absurd way to run a tax system, and we're under no obligations to jump through such hoops to satisfy your petty jealousies.
Reply to this commentLinkReport AbuseI guess it stings when an idiot liberal proves you wrong?
I don't require some pristine mathematical ratio. But when the super rich are making MORE money and paying LESS of it in taxes, then I think it is reasonable to ask them to chip in more to help the country, as opposed to cutting social security and medicare.
Considering the Bush tax cuts, which were never offset at the time with spending cuts, helped create the deficit problem, I think undoing those cuts is a reasonable way to help address the deficit. I think there should be spending cuts as well, but higher taxes can be a piece of the solution.
And guess what, the vast majority of people in this country agree with me. I don't think you are going to convince a lot of people that the Clinton tax rates were particularly unfair.
Reply to this commentLinkReport AbuseI'm sorry, what specifically did you "prove wrong?" You can deny you don't require some perfect ratio yet that's precisely what you're obsessing over, despite clearly seeing that high earners are still shouldering a hugely disproportionate burden. Just because these statistical abstractions are important to you doesn't mean they're a gospel truth to govern by. It's pure opinion.
It's true that Bush and the GOP at large decided they'd had enough of Medicare demagoging in the wake of Gingrich, and decided to take the path of least resistance on spending. But it's highly disingenuous for spending criticism to come from the architects of Mediscare. If we cut we're starving Granny, if we don't we're fiscally irresponsible. Nice gig if you can get it.
But even in the absence of the Bush tax cuts, SS & Medicare's problems would be only slightly less acute. Spare me any of those ridiculous projections of continuing surpluses based on Dot.com level growth and revenue continuing. The fall in revenues was economy related, not tax rate related, and revenues had recovered back to 18.5% of GDP, the historical norm, by 2007. Entitlement problems aren't going to be solved with taxes.
Reply to this commentLinkReport AbuseExcuse me but George W. Bush used the government surplus as his justification for cutting taxes. The entire point of the tax cuts was to reduce revenue.
"You see, the growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged, and on their behalf, I am here asking for a refund."
http://en.wikisource.org/wiki/George_W._Bush's_First_State_of_the_Union_Address
And the CBO agrees with me, not you, that the tax cuts reduced revenue. As does Alan Greenspan.
External Link
And I proved you wrong by showing that the tax burden on the rich has not increased since bill clinton. You use misleading statistics that ignore payroll taxes, effective rates, and growth in income share. I'm a liberal using the wall street journal.
As you can see from the chart on this page, the share of total taxes paid by the top 1% is pretty close to their share of income.
Reply to this commentLinkReport AbuseExternal Link
Shorter Bobby
"See if I bring in all this stuff we're not talking about, I can make my argument that the rich have more money than me, er have too much money and it's not fair I don't."
We get it Bobbie, you want those evil rich to pay even more because you don't think it's fair.
Reply to this commentLinkReport AbuseI made no assertion about what the justification was with the Bush tax cuts, but I remember the debate well. Putting yourself in someone's shoes in January of '01 gives a quite different economic perspective than today. We now know the Dot.com bubble was about to collapse, along with all the associated income and cap gains revenue that had poured in in prior years. Which makes it fundamentally dishonest to blame the reversal in the budget picture wholly on tax cuts. The impact of the cuts paled in comparison to the recession and market collapse.
If you'll look at the date on your WSJ piece, you'll see its most recent data is from 2006. The line I quoted you from the Tax Foundation table was 2008 vs 2000. And in those years, the top 1% did indeed carry a larger proportional burden of income taxes than under Clinton's rates. I chose 2000 as the obvious endpoint to the Clinton years. But again, I'm not the one obsessing the relationship has to perfectly correlate every year.
We will obviously have to wait a year or two see what the stats are as we speak. But the underlying point is you can NOT say high earners are paying an "unfair" share except under these silly, narrow standards of perfect continuity in the ratios.
Re: payroll and other taxes, you can browse the rest of the thread to see why I don't consider a payroll tax to be in the same category as income taxes. And I flat-out reject the table in that NY Magazine piece, which curiously cited no source. The last figures I saw - from a NY Times blog, no less - were that the top 1% got 19% of total income and paid 28% of ALL federal taxes, not just income taxes. That's an overrepresentation of about 50%.
Reply to this commentLinkReport AbuseHere it is.
Reply to this commentLinkReport AbuseExternal Link
As the chart I posted shows, you can set the top tax rate anywhere you want and it does not change revenue one iota. Rich people have a lot of options in how to realize income, and chasing their wealth is a fool's game.
I suppose you're one of those idiots who believes that if you set the tax rate at 100% you will get all of their wealth. In fact, you will get $0.00 as wealthy people shift their wealth into forms that don't include income.
I could make a better case for setting the top rate at 0%. You wouldn't get any of the top income, but people in lower tiers would be earning so much more that revenue would certainly go up.
In any case, I am sick and tired of "tax the rich" arguments such as yours, which are contrary to facts, harmful to our society, and harmful to revenue. Such arguments make a lot of people wonder if your agenda doesn't have anything to do with fairness or revenue, and instead is calculated to cause as much social harm as you possibly can.
Reply to this commentLinkReport Abuse