The 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. Foundation has updated its annual summary of the latest federal income tax data given that the IRS has released the percentile data early this year (July as opposed to September).
The basic story that comes from this newly available data for tax year 2006 is that the share of income (as measured by AGI) and the share of taxes paid by the top 1 percent of tax returns are once again at all-time highs.
In 2006, the top 1 percent of tax returns paid 39.9 percent of all federal individual income taxes and earned 22.1 percent of adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” , both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes. In 1990, those figures were 14 percent and 25.1 percent, respectively.
The latest summary of IRS data is available here: http://www.taxfoundation.org/legacy/show/250.html
By one measure of tax progressivity (the ratio of taxes paid to income earned for the top 1 percent of tax returns), progressivity has declined since 1993, but remained relatively unchanged since 2000 and since 1990. Note that under a pure flat tax (on AGI), the ratio would be 1. The higher the number, the greater the progressivity.
| Tax Year | Ratio of Tax Share to AGI Share |
| 1990 | 1.795 |
| 1991 | 1.911 |
| 1992 | 1.935 |
| 1993 | 2.104 |
| 1994 | 2.091 |
| 1995 | 2.073 |
| 1996 | 2.014 |
| 1997 | 1.909 |
| 1998 | 1.881 |
| 1999 | 1.854 |
| 2000 | 1.798 |
| 2001 | 1.933 |
| 2002 | 2.091 |
| 2003 | 2.044 |
| 2004 | 1.942 |
| 2005 | 1.858 |
| 2006 | 1.808 |