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 taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. 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 rateThe average tax rate is the total tax paid divided by taxable income. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. for a family earning between $50,000 and $75,000.
The facts should speak for themselves about the progressivity of our income tax system, but this debate has never been about the truth, it is all about politics and feeding public perceptions.
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Income Tax Summary Statistics for 2009 |
|||||||
|
All Returns |
AGI ($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 |