Yes, there is a class war, Warren Buffett once said, and my class is winning. The IRS study of taxes paid in 2007 makes his point. The top 1% of taxpayers averaged about $138 million in income, and paid taxes at a rate of 16.6%.
As Buffett says, their secretaries pay a higher rate. No wonder Republicans and conservaDems like the much regretted Evan Bayh are fighting to lower the estate tax rate as part of a “jobs” bill. These folks will have a lot to put in the estate that’s never been taxed as income.
Ah, for the extremist liberal days of Ronald Reagan when capital gains were taxed at the same rate as income.
For a report on the IRS study, here’s the WSJ David Wessel on the IRS Study
The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007, according to their tax returns, three times the slice they got in the 1990s, according to the Internal Revenue Service. They paid 2.05% of all individual income taxes in that year.
In its annual update of the taxes paid by the 400 best-off taxpayers, who aren’t identified, the IRS also said that only 220 of the top 400 were in the top marginal tax bracket. The 400 best-off taxpayers paid an average tax rate of 16.6%, lower than in any year since the IRS began making the reports in 1992.
To make the top 400, a taxpayer had to have income of more than $138.8 million. As a group, the top 400 reported $137.9 billion in income, and paid $22.9 billion in federal income taxes.
About 81.3% of the income of the top 400 households came in the form of capital gains, dividends or interest, the IRS data show. Only 6.5% came in the form of salaries and wages.
Over the past 16 tax years 3,472 different taxpayers showed up in the top 400 at least once. Of these taxpayers, a little more than 27% appear more than once. In any given year, about 40% percent of the top-400 returns were filed by taxpayers who weren’t in that exclusive club in any of the 15 years .
In all, the IRS received nearly 143 million individual tax returns for 2007, the year that ended with the onset of the worst recession in decades.