2010-11-04 20:01:00
The Top 1% of Earners Paid 38.02% of Federal Individual Income Taxes in 2008
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You probably hear people spouting off these types of stats all the time:
"The top 1% of income earners in the United States pay XX% of the taxes"
I've heard this statement come out of a person's mouth many times over the course of my lifetime. Some people will claim that "rich" people pay 50% of all individual income taxes in the country, while others will go as high as 60, 70, 80 or even 90%!
What is the truth?
What better place to go to find out the answer than the IRS (Internal Revenue Service). Taxfoundation.org has developed a couple of easy-to-follow charts based on the data provided by the IRS - I have provided a link to Taxfoundation.org below.
According to the IRS, the "income split point" for somebody to be included in the top 1% of all taxpayers (by income) was $380,354 in 2008 (the last year where data is available).
So, if you reported Positive Adjusted Gross Income (AGI) of $380,354 or over, then you were in the top 1% of all taxpayers in the United States in 2008.
According to the IRS, this group of taxpayers (1,399,606 total) paid 38.02% of all federal individual income tax collected in 2008.
The top 5% of all taxpayers (income split on this group was at $159,619 in 2008) paid 58.72% of all federal individual income taxes in 2008.
Let's continue to break this down:
Top 10% (Income Split Point $113,799) Paid 69.94% of Federal Individual Income Taxes
Top 25% (Income Split Point $67,280) Paid 86.34% of Federal Individual Income Taxes
Top 50% (Income Split Point $33,048) Paid 97.30% of Federal Individual Income Taxes
Bottom 50% (Anyone Making Less Than $33,048) Paid 2.7% of Federal Individual Income Taxes
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A few other interesting nuggets of information for you:
-top 1% of earners in 2008 brought home 20% of adjusted gross income but paid 38.02% of all federal individual income taxes
-top 1% of earners paid 40.4% of federal individual income taxes in 2007
-the top 0.1% of earners in 2008 (140,000 tax returns) paid 18.5% of federal individual income taxes
-the average income of this group in 2008 was approximately $6 million
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There you have it, courtesy of the IRS.
Source: Taxfoundation.org - Summary of Latest Federal Individual Income Tax Data
Filed under: General Knowledge
28 COMMENTS - What Say You?
Comment by Wayne on November 06, 2010 @ 8:23 am
My wife asked me a similar question last night, "How much of our tax dollars go directly to paying for entitlements like unemployment compensation, welfare, food stamps etc...
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Comment by Richard on November 07, 2010 @ 11:50 pm
Thanks for shedding light on the topic. What we hear from the Democrats is more smoke than light. Now, if we can just get the Republicans to explain their position instead of just saying "No" we might get somewhere.
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Comment by Richard on April 01, 2011 @ 1:46 pm
A more interesting and harder to obtain number is the percent of all taxes paid by the top 1% of earners. That includes state income taxes, real estate taxes, sales tax and of course "pay roll" taxes (social security, medicare, unemployment) etc. All of these extra taxes are less "progressive" than federal income taxes. Don't forget to include the share of social security taxes paid by employers. Those dollars are real taxes that otherwise would have gone to higher wages.
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Comment by ben on April 12, 2011 @ 10:56 pm
If the top 1% paid 38% of the federal income taxes collected in 2010, did they also earn 38% of the total earned income in 2010? Should the top 1% pay 1% of the federal taxes collected? If you believe that the the top 1% should pay the portion of taxes that is proportional to the amount that they earned out of the total earned income, then the top 1% would pay roughly 50% of all the federal taxes collected.
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Comment by Beth on April 26, 2011 @ 8:49 am
By extension, a question related to Ben's comment would then be if you were to show a similar pie chart of total earned income, what would be the slice percentage of the top 1% of income earners?
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Comment by PaulR on May 06, 2011 @ 9:53 pm
Beth, I believe the answer to your question is given in the article:
" -top 1% of earners in 2008 brought home 20% of adjusted gross income but paid 38.02% of all federal individual income taxes."
This however is hugely at odds with Ben's "If you believe that the the top 1% should pay the portion of taxes that is proportional to the amount that they earned out of the total earned income, then the top 1% would pay roughly 50% of all the federal taxes collected."
I am inclined to think the AGI # is more relevant, but perhaps someone can clear this up, with documentation. ;-)
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Comment by Pat on July 14, 2011 @ 3:06 am
This is VERY tilted info
Yes the rich pay a "High" percent of the "AGI".
Problem is they get to take our money in many ways spend it making more money for them selves and PAY NO TAX ON BILLIONS OF DOLLARS!
Call it what you may, but if a person collects$1000.00 per apartment unit times 100 units (hundred thousand) and esentially pays no tax but is using our money to pay his mortage, that is WRONG! The fact is the VERY rich (Top 2%) pay only a small fraction half to 2% of the TRUE INCOME in federal income tax & the rest of us pay almost 90% of all other taxes, like Soc Sec tax, sales taxes etc.
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Comment by Joe on July 21, 2011 @ 10:46 am
On the bottom 50%, one must take into consideration the following. The bottom 50% do pay federal gasoline taxes if they drive. They also indirectly pay corporate taxes for American corporation from which they get goods and services. The truth is corporations don't really pay taxes. They just raise the price of goods and services to reflect the tax bite. That is why it would be more honest just to have a federal sales tax rather than a corporate tax. It would also help American companies compete overseas since it would lower the cost of their exports and help them compete here by increasing the relative cost of imports since foreign companies pay no corporate taxes.
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Comment by Dan Ram on July 28, 2011 @ 7:48 pm
Pat give some kind of source please otherwise you are printing nonsense. Make me a believer. thank you.
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Comment by greg on July 29, 2011 @ 4:42 pm
AGI represents Adjusted Gross Income and, obviously, is a tax form calculation. Starting with all sources of income, including rent, dividends, wages, and all other income sources, certain deductions are allowed, but these are removed (phased out) for higher tax payers. AGI is a relevant number. And, sorry Pat, but you show your ignorance of tax law with your statement.
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Comment by Josh from CO on August 01, 2011 @ 12:18 pm
Ok, question. As I understand it the bottom 50% paid 2.7% of all FIIT. Say all of the bottom 50% collected EITC, refunding close to 100% or more of their 2.7% of paid income tax, 97.3% of the EITC is paid for by the above 50% of tax payers. Does the government keep any of the bottom 50%'s taxes?
What was the income split of the bottom 50%?
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Comment by Sonja on August 05, 2011 @ 8:24 am
I am sorry to all the wealthy on this site posting comments but I am going to have to say that I agree with Pat. You are wanting for those who don't have it to give it. So would you rather the rest of the U.S. citizens starve or struggle to survive while you are enjoying the fruits of your sometimes minimal labor? (A large majority of wealth is inherited) Companies are losing profits and going under while CEOs are still getting HUGE bonuses and increased salaries...but the average joe gets forced straight into the unemployment line. I guess it's too much to actually ask any of you to care about those who are working their butts off to keep companies going but getting a minute percentage of what CEOs earn...I do agree that there are many individuals who abuse the system, but then you also have those who truly need it and use it only as needed. It is not the job of the rich to take care of everyone else, no but it should be the job of EVERY U.S. citizen to provide the 20 to 30 percent income tax-UNLESS doing so would cause undo harm to the individual and their ability to survive. So if I am making 30,000 a yr then I should be paying between 6000 and 10000. If I am making 300000 I should be paying between 60000 and 100000. Sorry. I am sure you will still be able to afford your pretty BMW and the 8 bedroom house you live in (in which you probably only use 2 of the 8 bedrooms).
I am a college student making less than $20,000 a year but I STILL pay 20 to 30 percent of my income to taxes. I use food stamps because I have a child and I NEED them. But when I gradudate at the end of this year, my job turns perminant, full time and so I will be able to provide for myself and my daughter...BY MYSELF. I will be able to pay more money in taxes, do more community work, and invest into the future of this country by giving opportunities to those MOST DESERVING. At the end of the day, this is what should matter most. I hope that I keep to my beliefs when I do make more money and do not become selfish like the rest of you.
I live to serve my country like a marriage: for richer or for poorer, in sickness and in health, til death do us part...how about you?
Greed/money=the root of all evil, patriotism is dead.
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Comment by georg on August 23, 2011 @ 5:42 pm
49% of the population in this country don't pay fed/state taxes. So until you get off the "food stamp tit" I wouldn't bite the hand that is feeding you. Namely those of us who work our ass off only to have the government take our money and give it to jealous ingrates.
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Comment by Ann on August 23, 2011 @ 10:08 pm
Very well put, Sonja. So many people flaunt their "patriotism," when it's just really just greed. Yours is the kind of patriotism the country needs more of.
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Comment by Michelle on September 02, 2011 @ 6:23 pm
These numbers are very clear as presented yet don't answer the question that led me to the site. An important distinction that should be made in these reports is the discrepancy between an individual's income and his or her AGI. I have known rich people who managed to reduce their AGI significantly through convenient accounting tricks. If this happens throughout the upper income brackets, it'd significantly skew the "percentage of US income" vs "percentage of US income taxes paid" statistics. Even if the income and AGI were closely and consistently related through all the income brackets, the median income of pretty low. I wouldn't expect somebody with an income lower than $33,000 to have money left for taxes after paying for food and housing. The only thing I learned from this information is that this country has a significant amount of poor people. The fact that I, who can barely pay for all the necessities and my education loans (with no kids), am in the top 30-40% paints tells a sad story about the rest of the country.
Also, I have read in at least two other sources that the top 1% earns about 25% of the income. Considering that their income is insignificant compared to the wealth they are sitting on that reduces their reliance on their income, why shouldn't they pay about 40% of the country's income taxes?
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Comment by joshua e on September 03, 2011 @ 5:17 pm
the "percent of total income taxes paid" is misleading. based on percentage of the CBO's total federal tax numbers, the top 1% make 25% of the total income and pay 28% of the total revenue. also, the brunt of most employer and corporate taxes are ultimately shouldered by the middle class and working poor, in the form of lower wages and higher prices, respectively. state taxes such as sales tax fall harder on them too, since they have to spend more of what they make on taxable goods.
plus, there's a huge difference between the 1%, the 0.1% and the .01%...
http://www.politifact.com/truth-o-meter/statements/2011/aug/18/warren-buffett/warren-buffett-says-super-rich-pay-lower-taxes-oth/
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Comment by Mike on September 20, 2011 @ 12:02 am
Michele,
Just because someone has money in the bank and is "sitting" on it is not a reason to tax them more. They or their company earned that money. if they don't want to spend it until they feel it would make a difference to their business, that's their purogative. When the economy gets better and they need the additional people to expand their business, then they will spend THEIR money.
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Comment by HKgovt on September 26, 2011 @ 10:09 am
Here is the IRS site and tables with your statistics and MUCH MORE!You can compare years from 1986 to 2008.
Site: http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96679,00.html
and document with this information: 08in05tr.xls
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Comment by HKgovt on September 26, 2011 @ 10:21 am
SOURCE: Government IRS Web Site http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96679,00.html It is in document: 08in05tr.xls
The very rich Warren Buffet group which are the Top 1/10 of one percent of all incomes reported are just 139,961 tax returns each with Adjusted Gross Income (AGI) of $1,803,585 or more. The Buffet group total reported AGI is $839 billion, and the groups total Tax Paid is over $190 billion. This is 18.47% of all the income tax collected. The Tax they paid is over 22.695% of Buffet groups reported total income. The Buffet group has an average income of $5,997,178 and an average income tax paid of $1,361,079 per member.
The Richest Warren Buffet groups Tax Paid, over $190 billion, is over 35% higher than the under $141 billion paid by the Middle & Low Income group. The over $2.7 trillion income (AGI) of the Middle & Low Income group is 3.274 times larger than Buffet group income of $839 billion. In other words Buffet group has only 30.5% of the income of the Middle & Low Income group but pays over 35% more tax.
The math to backup what is in the text and assist you in verification:
Tax Paid Buffet group / Middle & Low Income group $190,498 / $140,898 = 1.352 or 35.2%higher
AGI Middle & Low Income group / Buffet group is $2,748,446 / $839,371 = 3.274 times more AGI income
AGI Buffet group / Middle & Low Income group is $839,371 / $2,748,446 = 0.3054 or 30.54% as much income or AGI
Tax Paid Upper Income group / Middle & Low Income group is $890,614 / $140,898 = 6.32 times more tax paid
AGI Upper Income group / Middle & Low Income group is
$5,678,179/$2,748,446 = 2.0659598 times more AGI income
These above numbers are in millions.
Average income & tax for each Buffet group member $839,371,000,000 / 139,961 = $ 5,997,178 income; $190,498,000,000 / 139,961=$1,361,079 tax
Average tax paid for each Middle & Low Income group member $890,614,000,000 / 34,990,145 = $25,452.33 tax
Average tax paid for each Upper Income group member $890,614,000,000 / 34,990,145 = $25,452.33
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Comment by JoeUSA on September 26, 2011 @ 1:36 pm
Pat on July 14, 2011 @ 3:06 am
Pat, you have drunk the liberal koolaide and you have NO clue what you are talking about!
Please just go ahead and move to a socialist country...
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Comment by Mr jay on October 03, 2011 @ 2:18 am
My uncle steve owns a grocery store, and has worked there his entire life. He employes 56 employees, and a whole bunch of part timers who like to fill in whenever they can get hours. He is not rich, but to the IRS. He brings in big income, which is then depleted by bigger bills. He works for free to make his grocery store work. He was given a dozen offers that could have made him a rich man, and bought him once things. The reason he couldn't sell is because larger chain stores will let many of the employees go, including the unemployable ones who work there because he can't say no to people. A lot of these new tax laws are going to make him even more broke, and shut down our only means of getting quality produce. My uncle employs a lot of people he shouldn't, but they all work the hardest they can, and the store keeps making some kind of profit keeping him afloat. He brings in about 10g for himself, and this new tax law will kill him.
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Comment by DG on October 13, 2011 @ 3:38 am
Top 1% own 40% of the wealth in this country. Top 10% control 85% of stocks.
This is a joke.
We need Social Democrats in this country with balls to step up to the Reich wing.
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Comment by Chuck on October 15, 2011 @ 12:30 pm
I read a lot of comments here about "poverty." Most have no idea what real poverty is. I wish every American were required to spend a certain period of time in a third-world country, where poverty means literal day-to-day survival. It wouldn't be difficult to find a country to visit as 70% of the world live in abject poverty. I once heard a person from Africa say "I want to go to America where the poor people are fat." Many people tout Cuba as an example of how communism can work. Well I've been to several third-world countries, including Cuba, and I can tell you that Cuba is miserably poor. We showed up on a job site in Santiago de Cuba, the second largest city in the country. They asked if we brought a hand saw, we told them no but we would buy one. They explained that there was no hand saw available for sale in the whole city! The party officials live in the former American quarter and are the only ones who can eat anything beyond beans, rice, mangoes and an occasional chicken. This has nothing to do with the American embargo as the country has free trade with the rest of the world. Most Americans who claim to be poor have no idea what they're talking about. Ask yourself why is it that immigrants who are poor become so successful in America, or at least are working and living nowhere near the horror from their native country. Every human society stratifies, from shammons, chiefs and elders, to communist party leaders, to successul capitalists. There is no escaping this reality and thus no hope for utopia. It violates basic human nature. Yes our society is far from perfect and our economy is fraught with greed and unfairness, and social problems. But it is still the best in the world, hands-down. Truly, if you don't like it then vote with your feet...in this country you're free to do just that.
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Comment by bob r on October 18, 2011 @ 8:49 am
Income tax is against wages W-2. trust fund babies file against capitol gains. Trust funds generally avoid taxes(teddy roosevelt tried to eliminate them). 338,000 is pretty comfortable but is the high end for the working man to include executives, Physician's, lawyers, etc but still working folk. The multi-million per year set get their money from other than wages and they spend it dodging taxes not paying them
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Comment by Steve K on October 18, 2011 @ 4:42 pm
Check out Table 1 on Page 9 and Table 3 on Page 12. The effective tax rate of the Top 400 Income Tax Returns was LESS than mine at $70,000. How is that possible? Well, first off, my capital gains are income, not 'capital gains' which are taxed at only 10%, even if they are paid in lieu of income. Second, my house mortgage is reasonable but doesn't help my itemized deductions much. But if you want to know why people are angry, look at the numbers!
http://www.irs.gov/pub/irs-soi/08intop400.pdf
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Comment by Keith S on December 14, 2011 @ 12:53 pm
I looks to me more like the IRS is reporting what the top 1% would pay if they had no tax breaks, it doesn't appear to come from the bottom line on their tax forms.
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Comment by BobB on February 15, 2012 @ 1:53 pm
How about we take all of the rich peoples and see how long it would take the government to spend it. I would give them a year. Who do you go for next?
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Comment by Mike on April 17, 2012 @ 10:55 am
This blog is making my head spin...must be all the spinning going on in here. How can some of you be so blind as to not see the hypocrisy of asking those paying 97% of the taxes to start paying their "fair share" while the other 50% gets to work less and have more without paying a net income tax? If you are looking for answers, go look in the mirror...that's who brings in more money...not the government.
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