Yesterday, we reported on some new IRS data showing the distribution of dividend income by age group. Today, we have a similar set of data on capital gains income by age group. As is the case with dividend income, it is clear that older taxpayers earn the lion's share of capital gains income and that allowing the current 15 percent 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. rate on capital gains income to rise to 20 percent in 2011 (and to 23.8 percent on some gains in 2013) will disproportionately hurt older Americans.
As the table below shows, while 6 percent of all tax returns reported some capital gains income, 13 percent of taxpayers over age 65 reported capital gains income. Indeed, one-third of all taxpayers reporting capital gains income are over age 65 and they earn 30 percent of all capital gains income. Capital gains income comprises 12 percent of their total 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.” .
The table also shows that capital gains income is not concentrated solely on the over 65 set. Indeed, 40 percent of taxpayers reporting capital gains income are between the ages of 45 and 65 – those building up to retirement – and they earn nearly half of all capital gains income.
These statistics help put a face on taxpayers who will be impacted by higher taxes on capital gains income. Something lawmakers should consider as the expiration of the Bush tax cuts nears at the end of 2010.
|
2008 Capital Gains Statistics by Age Group |
||||||||
|
Age Group |
Number of Tax Returns with Capital Gains Income |
Capital Gains Income ($Thousands) |
Percentage of Returns within Age Group with Capital Gains Income |
Percentage of Capital Gains Returns in this Age Group |
Percentage of Capital Gains Income Earned by Age Group |
Capital Gains Income as Share of Total AGI |
||
|
All returns |
8,052,357 |
$495,146,902 |
6% |
100% |
100% |
6% |
||
|
Under 18 |
175,733 |
$1,584,716 |
6% |
2% |
0% |
13% |
||
|
18 under 26 |
411,509 |
$3,515,547 |
2% |
5% |
1% |
1% |
||
|
26 under 35 |
564,869 |
$13,081,980 |
2% |
7% |
3% |
1% |
||
|
35 under 45 |
1,062,369 |
$82,558,916 |
4% |
13% |
17% |
5% |
||
|
45 under 55 |
1,599,667 |
$126,113,517 |
6% |
20% |
25% |
6% |
||
|
55 under 65 |
1,596,346 |
$117,558,437 |
8% |
20% |
24% |
7% |
||
|
65 and over |
2,641,864 |
$150,733,789 |
13% |
33% |
30% |
12% |
||
|
Source: IRS http://www.irs.gov/pub/irs-soi/08in15ag.xls |
||||||||