The Missing Facts in the Buffett Tax Debate April 16, 2012 Scott Hodge Scott Hodge Today, the Senate will vote on the “Buffett Tax” that would require taxpayers with $1 million or more in income to pay at least 30 percent of their income in federal income taxes. While the rhetoric of making the rich “pay their fair share” has always trumped the facts during this debate, I thought it would still be useful to post actual IRS data on how much of the income tax burden is paid by each income group and what their average (or effective) tax rate really is. In 2009, the most recent year for which such detail is available, millionaires earned 10 percent of all income, but paid 20 percent of all income taxes. Although there were only about 237,000 millionaires in 2009, they paid a greater share of the income tax burden than everyone earning under $75,000 combined – a total of 109 million taxpayers. Moreover, after accounting for credits and deductions, millionaires paid an average tax rate of 25 percent – more than three times the average tax rate for a family earning between $50,000 and $75,000. The facts should speak for themselves about the progressivity of our income tax system, but this debate has never been about the truth, it is all about politics and feeding public perceptions. Income Tax Summary Statistics for 2009 All Returns AGI ($Billions) Taxable Returns Income Tax After Credits ($Billions) Average Tax Rate Share of total taxes Share of all AGI All returns, total 140,494,127 $7,626 81,890,189 $865.9 11% 100% 100% $1 to $5,000 10,447,635 $27 306,587 $0.0 0.1% 0% 0% $5,000 to $10,000 12,220,335 $92 1,899,331 $0.4 0.4% 0% 1% $10,000 to $15,000 12,444,512 $155 2,883,906 $0.8 0.5% 0% 2% $15,000 to $20,000 11,400,228 $199 4,868,050 $2.5 1% 0% 3% $20,000 to $25,000 10,033,887 $225 4,639,085 $4.7 2% 1% 3% $25,000 to $30,000 8,662,392 $238 4,603,763 $6.8 3% 1% 3% $30,000 to $40,000 14,371,647 $500 9,589,845 $20.2 4% 2% 7% $40,000 to $50,000 10,796,412 $483 8,381,017 $25.4 5% 3% 6% $50,000 to $75,000 18,694,893 $1,149 16,449,393 $78.0 7% 9% 15% $75,000 to $100,000 11,463,725 $990 10,987,101 $80.5 8% 9% 13% $100,000 to $200,000 13,522,048 $1,801 13,374,553 $212.3 12% 25% 24% $200,000 to $500,000 3,195,039 $905 3,178,420 $176.3 19% 20% 12% $500,000 to $1,000,000 492,567 $332 489,904 $80.5 24% 9% 4% $1 to $1.5 million 108,096 $130 107,416 $32.8 25% 4% 2% $1.5 to $2 million 44,273 $76 44,015 $19.4 25% 2% 1% $2 to $5 million 61,918 $183 61,535 $46.9 26% 5% 2% $5 to $10 million 14,322 $97 14,236 $24.6 25% 3% 1% $10 million or more 8,274 $240 8,211 $53.8 22% 6% 3% Summary for $1 Million+ 236,883 $726.9 235,413 $177.5 25% 20% 10% Source: IRS 2009 Data, Table 1.2 http://www.irs.gov/pub/irs-soi/09in12ms.xls Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Federal Tax Policy Business Taxes Individual and Consumption Taxes Tags Millionaires and High Income Earners
