The Missing Facts in the Buffett Tax Debate

 
 
April 16, 2012

Today, the Senate will vote on the "Buffett Tax" that would require taxpayers with $1 million or more in income to pay at least 30 percent of their income in federal income taxes. While the rhetoric of making the rich "pay their fair share" has always trumped the facts during this debate, I thought it would still be useful to post actual IRS data on how much of the income tax burden is paid by each income group and what their average (or effective) tax rate really is.

In 2009, the most recent year for which such detail is available, millionaires earned 10 percent of all income, but paid 20 percent of all income taxes. Although there were only about 237,000 millionaires in 2009, they paid a greater share of the income tax burden than everyone earning under $75,000 combined - a total of 109 million taxpayers.

Moreover, after accounting for credits and deductions, millionaires paid an average tax rate of 25 percent - more than three times the average tax rate for a family earning between $50,000 and $75,000.   

The facts should speak for themselves about the progressivity of our income tax system, but this debate has never been about the truth, it is all about politics and feeding public perceptions.

Income Tax Summary Statistics for 2009

 

All Returns

AGI ($Billions)

Taxable Returns

Income Tax After Credits ($Billions)

Average Tax Rate

Share of total taxes

Share of all AGI

All returns, total

140,494,127

$7,626

81,890,189

$865.9

11%

100%

100%

$1 to $5,000

10,447,635

$27

306,587

$0.0

0.1%

0%

0%

$5,000 to $10,000

12,220,335

$92

1,899,331

$0.4

0.4%

0%

1%

$10,000 to $15,000

12,444,512

$155

2,883,906

$0.8

0.5%

0%

2%

$15,000 to $20,000

11,400,228

$199

4,868,050

$2.5

1%

0%

3%

$20,000 to $25,000

10,033,887

$225

4,639,085

$4.7

2%

1%

3%

$25,000 to $30,000

8,662,392

$238

4,603,763

$6.8

3%

1%

3%

$30,000 to $40,000

14,371,647

$500

9,589,845

$20.2

4%

2%

7%

$40,000 to $50,000

10,796,412

$483

8,381,017

$25.4

5%

3%

6%

$50,000 to $75,000

18,694,893

$1,149

16,449,393

$78.0

7%

9%

15%

$75,000 to $100,000

11,463,725

$990

10,987,101

$80.5

8%

9%

13%

$100,000 to $200,000

13,522,048

$1,801

13,374,553

$212.3

12%

25%

24%

$200,000 to $500,000

3,195,039

$905

3,178,420

$176.3

19%

20%

12%

$500,000 to $1,000,000

492,567

$332

489,904

$80.5

24%

9%

4%

$1 to $1.5 million

108,096

$130

107,416

$32.8

25%

4%

2%

$1.5 to $2 million

44,273

$76

44,015

$19.4

25%

2%

1%

$2 to $5 million

61,918

$183

61,535

$46.9

26%

5%

2%

$5 to $10 million

14,322

$97

14,236

$24.6

25%

3%

1%

$10 million or more

8,274

$240

8,211

$53.8

22%

6%

3%

               

Summary for $1 Million+

236,883

$726.9

235,413

$177.5

25%

20%

10%

               

Source: IRS 2009 Data, Table 1.2 http://www.irs.gov/pub/irs-soi/09in12ms.xls

   

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