The Real Tax Rates of the Rich |
| The Real Tax Rates of the Rich Posted: 18 Apr 2012 11:23 AM PDT That fact that America’s tax code is progressive–i.e., the wealthy pay more–has been largely a given since the first income-tax was levied in 1862. Yet the Buffett Rule and the ensuing debate over Mitt Romney’s taxes has painted a picture of America’s tax structure as regressive. Polls show that many Americans think the wealthy now pay a lower share than the rest of America. While this may be true for a small number of rich people, it is broadly inaccurate. According to the most recent data from the IRS, America’s tax code remains progressive all the way up the income ladder–until you get to a tiny sliver of Americans who earn more than $10 million a year (there are about 8,000 of those out of 104 million filers). What’s more, the wealthiest earners are paying a higher tax rate than they did in 2008. Consider the following chart, which shows adjusted gross incomes and average tax rates, i.e., total income tax as a percentage of adjusted gross income less deficit: We all know that the one percent (those making around $340,000 a year) as a group pay a higher rate than any other income group. Yet the new IRS data show that even the $1 million-plus earners (the top fraction of the one percent) pays the highest rate. It’s only when you get to somewhere between the $10 million-plus earners and the “Fortunate 400″–the 400 highest earners–that the tax rates paid start to dip. And when they dip, they still dip to levels far above the average rates paid by 90% of Americans. The Fortunate 400 paid a rate of more than 18% in the latest period. This isn’t to argue against higher taxes on the wealthy. Nor does it deny that some rich people reduce their taxes to well below the official rates through tax avoidance schemes and capital gains. Yet the charts do support the previous findings that a growing number of today’s wealthy make their money from salaries rather than capital gains. And those top earners as a group still pay the highest rates in the country.
|
| You are subscribed to email updates from The Wealth Report To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment