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 taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. es and earned 22.1 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI)Adjusted gross income (AGI) is a taxpayer’s total income minus certain “above-the-line” deductions. It is a broad measure that includes income from wages, salaries, interest, dividends, retirement income, Social Security benefits, capital gains, business, and other sources, and subtracts specific deductions. 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 taxAn income tax is referred to as a “flat tax” when all taxable income is subject to the same tax rate, regardless of income level or assets. (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 |