Skip to comments.US Federal Individual Income Taxes by Income Level 2001-2009
Posted on 07/05/2012 8:10:52 PM PDT by justlurking
Since the "soak the rich" rhetoric has begun again, I though it was a good time to make sure that everyone knows exactly how adjusted gross income and federal individual income taxes are distributed among the various income brackets.
I hope the moderators will indulge me and leave this in front-page news. I encourage everyone to bookmark this thread or the original source of data, so that you can refer to it when someone claims that the rich aren't paying their fair share.
First, let's start with the source of the data:
That's an Excel workbook. If you don't have Excel or don't want to risk opening it, you can find a PDF at:
Click on the page image to open the PDF in Adobe Acrobat Reader, if you have it installed.
This is data compiled by the IRS from tax returns, over nine years from 2001 through 2009. The dollar amounts have been adjusted for inflation, so they are constant dollars from year to year, in 1984 dollars. The baseline year is really important to remember below.
Before we start comparing people in income categories, let's first define exactly what those are. Each line defines the minimum adjusted gross income (AGI on your tax return) for the category:
The top 1% line makes it difficult to see exactly what the values are for the remaining categories. And, as noted above, it is in 1984 dollars. So, to determine where you lie on the graph, here's what they were in 2009, in 2009 dollars:
How do you read this table? Get your adjusted gross income from your 2009 tax return, and find the largest amount in the right column that is less than or equal to your AGI. The left column tells you your income category. For example, if your AGI was $100,000 -- it's less than $160,311, but more than $72,082. So you were in the top 5% in 2009. BTW, if you are in the top 5%, but not in the top 1%, you'll find more thresholds at 4%, 3%, and 2% in the original data.
OK, now you know what income category you are in. But, let's go back and look at that graph above. Do you notice that most of the income lines are nearly straight? In fact, most of them rise slightly until 2007, then fall back slightly in 2008 and 2009. However, what happened to the top 1%? There is a huge drop from 2007 to 2009. It's actually back to what it was in 2003 -- a nearly 40% drop. I'll leave it as an exercise to the reader to figure out why.
Next, let's look at the average tax rate:
This is not the top tax rate. This is the actual average federal individual income tax rate that was paid by households in the income category, calculated by dividing the total individual income taxes paid by the total adjusted gross income.
This does NOT include Social Security taxes, Medicare taxes, corporate income taxes, excise taxes, sales taxes, state and local income taxes, property taxes, etc, etc. The depicted rate only includes US federal individual income taxes. But, since these are the rates that were lowered in 2003, this is what we should examine to determine whether those rates are "unfair". And it's clear that the higher your income category, the higher your tax rate -- and it has always been that way, at least for the top 1% and below.
An aside: The Congressional Budget Office has compiled all federal taxes paid by the various income levels, from 1979-2007. You can find more information here: US Federal Taxes by Income Level 1979-2007. However, the CBO has not updated this data since then.
What do you see in the average income tax rates? All of them went down in 2003. But, they have stayed more or less the same until 2007. Since then, the average tax rates for the top 1% (and top 0.1%) have gone up, while everyone else has gone down. I'm not quite sure why this occurred. I'll speculate that the top 1% shifted from long-term capital gains to short-term gains, which boosted their tax rate. Everyone else's AGI went down, lowering their top marginal rate and therefore their average rate. But, I'm interested in any other explanations.
However, none of this really explains how much of the overall federal individual income tax burden is paid by the different income groups. So, let's get to it:
Look at that graph carefully. the first thing you should notice is that the bottom 50% (the gray at the bottom) pay only 2.25% of US federal individual income taxes in 2009. And that is down from 3.97% in 2001.
The top 0.1% paid 17.11% of US federal individual income taxes in 2009. The top 1% (which includes the top 0.1%) paid 36.73%: over two-thirds of all US federal individual income taxes. And their share of the burden was increasing from 2003 through 2007, despite the 2003 tax cut. Why would anyone think they aren't paying their fair share?
Let me put on an Occutard hat quickly: "B-b-but they have all the income!!!". Disgusted by the smell, I pull off the hat and throw it as far away as possible, and make a note to wash my hair later and delouse it.
Yes, the top 1% earns a significant percentage of the income. Here's the actual distribution of adjusted gross income:
Can you see how the two compare? The distribution of taxes is definitely biased toward higher incomes (which should be obvious from the tax rates.
Still can't see it? Let's put the two of them right next to each other. You may need to maximize your browser screen.
To reiterate, the top 1% pays 36.73% of all US federal individual income taxes. But, they only earn 16.93% of all adjusted gross income. The top 1% are already paying a higher burden than 99% -- which pays 63.27% of all US federal individual income taxes, but earns 83.07% of all adjusted gross income.
Repealing the 2003 tax cuts will only shift the burden further onto the top 1%. If that's what you want, then be honest about it... but don't pretend that it's "fair".
So these graphs show how much the government steals from you it’s slaves.
no- it shows how it steals from those who work hard and are successful yet takes little from the lower income earners, who also get the lions share of government benefits...
btw- great work...this should be sent to Fox network and every major conservative talk show host....as well as the criminal liberal media, for the record...
Understand that there isn’t a chart for after Obama was elected but why does it take the government so long to update.
Oh I Know why.....
This is the table that you should use to figure out where you are in the income categories, using your 2009 AGI:
As a result of this change, a family with $250,000 AGI in 2009 would be in the top 2%.
The IRS data used for these graphs is current through tax year 2009, which includes the first year of Obama. It was published in July, 2011. Hopefully, the 2010 update will be published soon.
The CBO data lags even farther behind -- but that is significantly more complex. The data current through tax year 2007 was published in June, 2010. I keep hoping they will publish an update, but I suspect the CBO has been busy with other things.
Well then I'm sure you considered "income" sheltered in tax-exempt "charitable" foundations that the extreme rich use to game regulations? You know, like the donations they make to green groups to put their competition out of business. Oh and while you're at it, please add in the hidden income reported as deductions in corporate expenses.
You didn't? Well wake me when you get it done and I'll consider your sob story. Until then I'll stick with the observation that it isn't the rich being soaked for taxes by total percentage of cash flow they enjoy nearly as much as their upper middle class competition.
The Conservative position is to ABOLISH the federal individual income tax ~ NOT TO INCREASE IT ON ANYBODY!!!!
The folks carrying the water for the super rich probably work for them.
This most recent data from the IRS does not.
But, earlier data from the CBO doesn't use adjusted gross income: it uses total income from all sources (including transfer payments like the earned income credit). It also distributes corporate income and taxes among households according to their share of capital income:
The resulting numbers aren't exactly the same, due to the differing basis. But, the trends are very similar.
Can I get that and your cites as a PDF? I need to hammer that one home with some idiots.
Wow, going by that chart, my brother is a 1-percenter! No wonder my “independent” bro is suddenly so ticked off about Democrats.
The Conservative position is to expose the LIES that the Treason Media spreads on behalf of the RATS. This excellent work destroys the myth of the rich not paying their “fair” share. It should be praised because of this not “corrected”.
But not the income value of the perks.
I see also that you have ignored my point about tax-exempt foundations entirely.
It's worse than that. The NGO types working for the wealthy enviro-"donors" also do occasional stints in various government agencies. Mary Nichols is a prime example.
The cause should also be examined closely ~ and obviously the federal personal income tax has FAILED.
i doubt it will be published anytime soon as it will be another embarrassment for obama....usually by now we find out what % of the people paid no income tax for the previous year...when was the last time during obama’s reign of error we’ve received a number on the % of people who pay no federal tax???
Well, it's apparently the direct federal portion anyway. Doesn't include state and local taxes, sales taxes, or social security. It also doesn't include the money you end up paying as a portion of the products you buy that are directly related to federal rules, policies, procedures or guidelines. When you add it all together, it's amazing we have any money left at all.