|
Income Group (AGI) |
Percent of Returns in Income Group that are Taxable |
Share of Total AGI in Income Group |
Share of Total Federal Income Taxes Paid* by Income Group |
Income Taxes Paid as a Percentage of AGI |
Tax Cut** |
||||
|
|
2000 |
2004 |
2000 |
2004 |
2000 |
2004 |
2000 |
2004 |
|
|
Total |
74.8% |
67.4% |
100% |
100% |
100% |
100% |
14.9% |
11.5% |
3.4% |
|
$1-$5,000 |
18.0% |
6.5% |
0.5% |
0.5% |
-0.2% |
-0.2% |
-4.4% |
-5.6% |
1.2% |
|
$5,000-$10,000 |
43.2% |
32.0% |
1.5% |
1.3% |
-0.7% |
-0.9% |
-6.4% |
-7.7% |
1.3% |
|
$10,000-$15,000 |
57.2% |
48.7% |
2.4% |
2.1% |
-0.5% |
-1.3% |
-3.3% |
-7.1% |
3.8% |
|
$15,000-$20,000 |
64.7% |
54.5% |
3.2% |
2.9% |
0.2% |
-0.9% |
1.0% |
-3.4% |
4.4% |
|
$20,000-$25,000 |
75.7% |
61.1% |
3.5% |
3.2% |
1.1% |
-0.1% |
4.6% |
-0.4% |
5.0% |
|
$25,000-$30,000 |
87.2% |
68.7% |
3.6% |
3.4% |
1.7% |
0.8% |
6.8% |
2.5% |
4.3% |
|
$30,000-$40,000 |
96.0% |
81.1% |
7.4% |
7.1% |
4.2% |
3.2% |
8.5% |
5.1% |
3.4% |
|
$40,000-$50,000 |
98.5% |
89.6% |
7.3% |
7.0% |
4.8% |
4.2% |
9.8% |
6.9% |
2.9% |
|
$50,000-$75,000 |
99.3% |
96.1% |
16.4% |
16.3% |
12.2% |
11.9% |
11.1% |
8.3% |
2.8% |
|
$75,000-$100,000 |
99.8% |
99.0% |
11.6% |
12.9% |
10.5% |
11.0% |
13.5% |
9.8% |
3.7% |
|
$100,000-$200,000 |
99.9% |
99.8% |
16.8% |
19.0% |
19.4% |
22.5% |
17.3% |
13.6% |
3.7% |
|
$200,000-$500,000 |
99.9% |
99.9% |
9.6% |
1.0% |
15.4% |
17.9% |
23.9% |
20.6% |
3.3% |
|
$500,000-$1,000,000 |
99.9% |
99.9% |
4.2% |
4.3% |
8.0% |
9.2% |
28.3% |
24.3% |
3.9% |
|
$1,000,000-$1,500,000 |
99.9% |
99.9% |
1.9% |
1.9% |
3.7% |
4.0% |
29.1% |
24.7% |
4.4% |
|
$1,500,000-$2,000,000 |
99.9% |
99.9% |
1.2% |
1.2% |
2.4% |
2.5% |
29.3% |
25.0% |
4.4% |
|
$2,000,000-$5,000,000 |
99.9% |
99.9% |
3.1% |
2.9% |
6.1% |
6.2% |
29.2% |
24.7% |
4.5% |
|
$5,000,000-$10,000,000 |
99.9% |
99.9% |
1.9% |
1.6% |
3.6% |
3.3% |
28.5% |
23.8% |
4.7% |
|
$10,000,000 or more |
99.9% |
99.9% |
4.7% |
3.8% |
8.0% |
7.0% |
25.3% |
21.1% |
4.3% |
* “Federal income taxes paid” equals income taxes after credits minus the refundable portions of both the Earned Income Tax Credit (EITC) and the additional child tax credit.
** “Tax cut” is the percentage point fall in the effective tax rate for that income group from 2000 to 2004.
Source: Internal Revenue Service
Several important stories emerge from this table. First, effective tax rates have fallen for every income group. Those in the bottom and middle income groups, as well as millionaires, have seen their tax rates fall. The percentage decrease in tax burden is greatest for those in the lowest income groups between 2000 and 2004.
For example, in 2000 a taxpayer with an AGI of $35,000 who pays 8.54 percent of his income in federal income taxes would pay $2,959 in federal income taxes after credits. Following the tax cuts that push his effective rate down to 5.12 percent, he would pay $1,792 in taxes—a 39.4 percent decrease in tax burden.
At the other end of the income spectrum, a taxpayer making $1.75 million would see his effective tax rate fall from 29.35 percent to 25 percent. Before the tax cuts, he would pay $513,625 in federal income taxes after credits. Following the tax cuts, he would pay $437,500. This amounts to a 14.8 percent reduction in tax burden.
Second, even though their effective tax rates have fallen, taxpayers in the $75,000 - $500,000 AGI range are shouldering a larger burden of the total taxes paid. This can be seen, for example, in the $100,000 - $200,000 income group, which paid 19.4 percent of all federal income taxes in 2000, yet in 2004 paid 22.5 percent of all income taxes.
There are two reasons for this increase: (1) This income group’s fraction of the total AGI has increased; and (2) taxpayers in these groups are most likely to be hit by the Alternative Minimum Tax (AMT), which has been changed very little since 2000.
Third, as shown by the “percent of returns that are taxable” column, the tax cuts have taken many taxpayers in the low-income groups off the tax rolls entirely. In 2000, approximately 29 million tax returns had no income tax. By 2004, that number had risen to around 43 million returns. This is largely because of the expansion of the Child Tax Credit along with the establishment of the 10 percent tax bracket.
Finally, in 2004, much more money was returned to low-income earners through the tax code via programs like the Earned Income Tax Credit (EITC) and the Refundable Child Tax Credit than in 2000. Table 1 shows that among lower- and middle-income groups, many taxpayers receive more back from the IRS than they actually pay in federal income taxes. Every AGI group up to $25,000 actually receives more back from the IRS in the aggregate than it pays in federal income taxes.
I can't believe any of these numbers are not 100%?
I wonder how the DUmmies will try to spin THAT?