IRS Report Shows the “Rich” Are Not Monolithic

January 29, 2009

A new IRS report (PDF) analyzing the 400 individual tax returns with the highest AGIs in each year between 1992 and 2006 clearly shows that wealthy Americans are not a static elite club that no one can penetrate. Indeed, the report indicates a great deal of churning among the top 400 over the 15-year period analyzed. As the text below summarizes, some 40 percent of the richest 400 are new to the club each year and only about 27 percent have been on the list more than once.

Table 4 presents data for the 400 taxpayers reporting the highest adjusted gross incomes (AGI). This table shows the number of times that these returns were in this group for each of Tax Years 1992 through 2006. In interpreting the data presented in Tables 1-3, two aspects of the selection of returns are particularly important. First, the 400 returns with the highest AGI were selected in each year, although the total number of returns filed increased every year (except 2002) between 1992 and 2006. Thus, the top 400 returns represent a slightly declining share of the total number of returns filed. Second, 400 returns were separately identified each year based on AGI in that year. Therefore, it did not matter for identification whether the taxpayer had been in the top 400 in any prior year or appeared in the top 400 in any subsequent year. Over the 15 tax years a total of 6,000 returns were identified for the table. There were 3,305 different taxpayers representing the top 400 returns of each year. Of these taxpayers, a little more than 27 percent appear more than once and slightly more than 15 percent appear more than twice (see columns 2 and 3). In any given year, on average, about 40 percent of the returns were filed by taxpayers that are not in any of the other 14 years (see columns 4 and 5). In each year, 8 (or 2.0 percent) of the returns are for taxpayers who can be found in all 15 years. Thus, the data shown in the table mostly represent a changing group of taxpayers over time, rather than a fixed group of taxpayers.

Number of Years in Top 400

Number of Primary Filers in Group

Percent of Primary Filers Represented by Each Group

Number of Returns in Total Top 400 Population over 15-Year Period

Percent of Returns Represented by Each Group

1

2,394

72.44

2,394

39.9

2

408

12.34

816

13.6

3

173

5.23

519

8.65

4

97

2.93

388

6.47

5

62

1.88

310

5.17

6

34

1.03

204

3.4

7

31

0.94

217

3.62

8

21

0.64

168

2.8

9

17

0.51

153

2.55

10

13

0.39

130

2.17

11

12

0.36

132

2.2

12

12

0.36

144

2.4

13

17

0.51

221

3.68

14

6

0.18

84

1.4

15

8

0.24

120

2

Total

3,305

100

6,000

100


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