Since the release of President Obama’s FY 2010 budget, which calls for raising the top two income tax bracketsA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. , 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 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.
As the first table below shows, in 2006 Americans filed more than 138 million tax returns totaling roughly $8 trillion in 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.” (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 |