Useful Facts on Who Pays the Nation's Taxes

March 05, 2009

Since the release of President Obama's FY 2010 budget, which calls for raising the top two income tax brackets, we have received quite a number of requests for data on the share of taxes paid by the so-called rich. I thought it would be helpful to post the most recent IRS figures on the distribution of the income tax burden.

As the first table below shows, in 2006 Americans filed more than 138 million tax returns totaling roughly $8 trillion in adjusted gross income (AGI). However, nearly 46 million tax filers (one-third of all filers) had no income tax liability after benefiting from the credits and deductions available to them. Among the lowest income groups, more than half of the filers had no liability at all. More than $2.5 trillion in AGI (one-third of all AGI) was not subject to income taxes that year.

As the second table shows, the government was reliant on the remaining 92 million tax filers for raising the necessary amount of income taxes to pay for government programs. In 2006, these actual tax payers had roughly 5.4 trillion in AGI and paid more than $1 trillion in income taxes. The average tax payment was $11,044 and the average effective tax rate was 19 percent.

In 2006, there were roughly 4 million taxpayers with incomes above $200,000—the target group for Obama's higher taxes. These taxpayers account for 39 percent of total AGI among actual taxpayers but pay 53 percent of all income taxes. The vast majority of these upper-income taxpayers—91 percent—earn between $200,000 and $1 million. These taxpayers account for half of the AGI and roughly half of the taxes paid by the "rich."

There were about 353,000 taxpayers with incomes above $1 million. They had a total AGI of $1 trillion and accounted for $273 billion in income taxes in 2006, 27 percent of all income taxes. Just 15,911 taxpayers had incomes above $10 million. They paid $91 billion in income taxes, 9 percent of all income taxes. Their average tax payment was $5.7 million. 

Adjusted Gross Income 2006

Total Number of Tax Returns

Total Adjusted Gross Income

Number of Returns with No Tax Liability

Percentage of Filers With No Liability

AGI Not Subject to Income Tax

 

 

 ($Thousands)

($Thousands) 

   

Total

138,394,754

8,030,842,945

45,681,047

33.0%

2,570,375,819

$1 -- $5,000

11,633,370

31,004,475

10,776,846

92.6%

30,044,572

$5,000 -- $10,000

11,786,747

87,992,646

8,420,656

71.4%

81,398,821

$10,000 -- $15,000

11,711,680

146,357,710

5,937,012

50.7%

121,565,899

$15,000 -- $20,000

10,937,694

191,038,095

5,218,904

47.7%

144,946,319

$20,000 -- $25,000

9,912,261

222,862,623

4,059,849

41.0%

155,442,187

$25,000 -- $30,000

8,749,761

240,252,128

2,972,741

34.0%

149,085,576

$30,000 -- $40,000

14,151,824

492,158,138

2,996,264

21.2%

254,394,467

$40,000 -- $50,000

10,687,193

478,795,699

1,358,116

12.7%

211,557,557

$50,000 -- $75,000

18,854,917

1,158,386,347

1,040,366

5.5%

432,049,603

$75,000 -- $100,000

11,140,408

960,841,319

160,992

1.4%

303,938,561

$100,000 -- $200,000

12,088,423

1,606,322,715

52,168

0.4%

426,274,710

$200,000 -- $500,000

3,121,485

895,151,023

8,527

0.3%

164,073,641

$500,000 -- $1,000,000

589,306

399,608,986

1,840

0.3%

52,000,745

$1,000,000 -- $1,500,000

150,431

182,043,576

437

0.3%

20,699,934

$1,500,000 -- $2,000,000

64,007

110,211,789

255

0.4%

12,202,441

$2,000,000 -- $5,000,000

98,724

295,129,497

347

0.4%

30,348,767

$5,000,000 -- $10,000,000

24,975

171,407,703

91

0.4%

17,774,019

$10,000,000 or more

15,956

452,475,087

45

0.3%

53,774,610

Source: http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html

   

Adjusted Gross Income  2006

Total Number of Taxable Returns

Remaining Taxable Income

Total Taxes Paid

Share of Total Taxes Paid

Average Tax Payment of Those With a Liability

Effective Rate of Those With a Tax Liability

   

 ($Thousands)

($Thousands) 

     

Total

92,713,707

5,460,467,126

1,023,920,139

100%

$11,044

19%

$1 -- $5,000

856,524

959,903

88,684

0.01%

$104

9%

$5,000 -- $10,000

3,366,091

6,593,825

654,390

0.1%

$194

10%

$10,000 -- $15,000

5,774,668

24,791,811

2,373,130

0.2%

$411

10%

$15,000 -- $20,000

5,718,790

46,091,776

4,759,278

0.5%

$832

10%

$20,000 -- $25,000

5,852,412

67,420,436

7,501,691

0.7%

$1,282

11%

$25,000 -- $30,000

5,777,020

91,166,552

10,396,566

1.0%

$1,800

11%

$30,000 -- $40,000

11,155,560

237,763,671

27,293,090

2.7%

$2,447

11%

$40,000 -- $50,000

9,329,077

267,238,142

32,509,507

3.2%

$3,485

12%

$50,000 -- $75,000

17,814,551

726,336,744

94,443,396

9.2%

$5,301

13%

$75,000 -- $100,000

10,979,416

656,902,758

90,019,371

8.8%

$8,199

14%

$100,000 -- $200,000

12,036,255

1,180,048,005

209,381,101

20.4%

$17,396

18%

$200,000 -- $500,000

3,112,958

731,077,382

177,041,086

17.3%

$56,872

24%

$500,000 -- $1,000,000

587,466

347,608,241

94,213,951

9.2%

$160,373

27%

$1,000,000 -- $1,500,000

149,994

161,343,642

44,125,225

4.3%

$294,180

27%

$1,500,000 -- $2,000,000

63,752

98,009,348

26,721,295

2.6%

$419,144

27%

$2,000,000 -- $5,000,000

98,377

264,780,730

71,647,095

7.0%

$728,291

27%

$5,000,000 -- $10,000,000

24,884

153,633,684

39,556,521

3.9%

$1,589,637

26%

$10,000,000 or more

15,911

398,700,477

91,013,554

8.9%

$5,720,166

23%

Source: http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html

     

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