Are You Rich? $92,000.00 Puts You in Top 10%

The Tax Foundation ^ | The Tax Foundation

[Weimdog]

Newest Data Show High-Income Taxpayers Earning and Paying More

Top 25 Percent Paid 84 Percent of Income Taxes; Top One Paid 37.4 Percent

According to preliminary data released by the Internal Revenue Service and a new Tax Foundation Special Report, the top-earning 25 percent of taxpayers earned more than two-thirds of the nation's income (67.3%) and paid more than five out of every six dollars collected by the federal income tax (84%) in 2000. There were 32 million tax returns in the top 25 percent, all with adjusted gross incomes (AGI) over $55,225.

The top one percent of U.S. taxpayers (annual income over $313,469) made 20.8 percent of the income earned in 2000 and paid 37.4 percent of the total federal individual income taxes collected that year. This fraction of the tax burden paid by the top one percent - well over a third of the total - is up from 25.1 percent ten years earlier in tax year 1990.

At the other end of the income spectrum, the bottom 50 percent of the nation's taxpayers earned only 13.0 percent of all income in 2000, but they paid an even smaller fraction of the federal individual income taxes collected - 3.9 percent.

The data come from Tax Foundation Special Report No. 118, titled, "Who Pays the Federal Individual Income Tax?" by economist David Hoffman.

"Americans at the upper end of the income scale continue to bear an increasing share of the total federal individual income tax burden," observed Hoffman. "In a progressive tax system like ours, economic growth inevitably results in a steady shifting of the tax burden up the income scale. Although the current economic slowdown did begin in 2000, the annual growth rate for that year was still 5 percent, so a higher percentage of tax collections came in from high earners."

As the table shows, the top five percent of income earners (adjusted gross income over $128,336) and the top 10 percent (adjusted gross income over $92,114) both pay a significantly greater portion of federal individual income taxes than they did a decade ago.

[.38sw]

Gee, thanks for your analysis of our financial situation. We live in the California bay area. High cost. My husband is an MD, we are paying $160,000 student loans off. I'm a good money manager, but we are also in a high tax bracket, along with a high cost area. But thanks for your concern.

[Sub-Driver]

ugh......I think No. I work for my money and earn it.

[Michael Barnes]

When my wife was working, in 1998 we both got new jobs. We were doing alright too...Little did we know that we would get full on raped by the tax code. She hasn't worked in a couple years now..Everytime she brings it up (usually when times get tough), I try to remind her that the kids are better off being at home and, WE DON'T WANT TO GO BACK TO OWING THE IRS EVERY YEAR!!

[.38sw]

You are right about used cars. I bought my '98 when it was a year old, low miles, and saved about $8,000 over the new price. My husband driving his old car has allowed us to pay down his massive student loans, and now we have been able to buy a house this year. No, we are not rich. Not with the median house price in our county near $500,000. We plan to replace his car with a new used car car this summer.

[meyer]

I'd have to say that if one has a "zero" in the "wages, tips, salary, and other compensation" line on form 1040, and still manages to pull in $92K, then they are truly rich. Or, the have one heck of a good pension...

[METARZAN]

I always knew I was a top 5 "percenter" in the "looks" category, now I am in the top 5% of the economic spectrum also.

I'm in the money

The Skies are sunny

It takes a lot of what I've got to get along

Metarzan

[Jesse]

Atlas...Shrug!

[Nebullis]

Woohoo! I'm rich!!

Hey, get off of my cloud!

[CobaltBlue]

You may not be rich but with spending habits like you have, you are on the way to being rich.

Congrats on the new house.

[.38sw]

Yeah, yeah, I know. I'm not a California native, but I married one. The only way I'm leaving the state is if my husband divorces me.

[CobaltBlue]

No, if you are self-employed then you report your income on line 12 (and schedule C).

$92K AGI isn't chicken feed but depending on where you live, it won't necessarily be the same as "truly rich."

$92K probably feels richer in the heartland than it does in the big city.

[VermiciousKnid]

Hey! We're RICH! Who knew?

I guess now's the time for me to order that new yacht, huh?

Regards,

[TaZ]

Now I know why the politicoes are constantly trying to find new ways to keep my net at about that figure, even when I'm grossing almost twice that much now...

[meyer]

No, if you are self-employed then you report your income on line 12 (and schedule C).

whoops! Forgot about self-employed - I was only thinking of dividends, interest, and that kind of thing.

$92K AGI isn't chicken feed but depending on where you live, it won't necessarily be the same as "truly rich."

Well, I'm not there, but I am above average. I certainly don't feel rich though.

$92K probably feels richer in the heartland than it does in the big city.

Yes, judging from the costs I see from posters in California and the east coast, I would say that my cost of living is way lower here in Tennessee than it is in those huge metropolitan areas. Real estate is a big part of it, but most everything else is probably cheaper here than it is in most huge cities.

[modern_orthodox]

what schoolteacher makes 92k? a whole bunch of my family works in the NY public school system and, lemme tell you, it takes somewhere between 2 and 3 of 'em to make that much...

[VermiciousKnid]

As another poster has already mentioned, the term "rich" is inexorably linked to geographic location.

I left work about 7 years ago to raise the kids. My husband is a policeman here on Long Island. He makes a nice salary (over the $92K mark) and knows it.

HOWEVER, the average house price has skyrocketed here, and I dare you to find a house -- even a teeny tiny one -- in a decent neighborhood for less than $250K (that's a VERY conservative estimate; it's more like $325K). Add to that the extraordinary taxes (we pay just shy of $10K/year in PROPERTY TAXES ALONE for a 4 BR Cape on 1/3 acre) and WHAMMO! that $92K is whittled down to approximately $50K for a family of four. Not exactly rollin' in the dough. In our case, we are paying an extra hit for Catholic school tuition, because we refuse to subject our children to the nonsense in the (very expensive) public schools.

All that being said, the SECOND my husband can retire in about 7 years, we will leave NY for good. People are absolutely insane trying to retire on Long Island. It just ain't worth the $$$.

Regards,

[DB]

It isn't quite that simple. It depends on how many dependents you have and how old they are among other things.

[RockyMtnMan]

You must be over 50.

[meyer]

As another poster has already mentioned, the term "rich" is inexorably linked to geographic location.

I left work about 7 years ago to raise the kids. My husband is a policeman here on Long Island. He makes a nice salary (over the $92K mark) and knows it.

HOWEVER, the average house price has skyrocketed here, and I dare you to find a house -- even a teeny tiny one -- in a decent neighborhood for less than $250K (that's a VERY conservative estimate; it's more like $325K). Add to that the extraordinary taxes (we pay just shy of $10K/year in PROPERTY TAXES ALONE for a 4 BR Cape on 1/3 acre) and WHAMMO! that $92K is whittled down to approximately $50K for a family of four. Not exactly rollin' in the dough. In our case, we are paying an extra hit for Catholic school tuition, because we refuse to subject our children to the nonsense in the (very expensive) public schools.

Man, that's high. In contrast, I'm sitting in a 1750 sq. ft. ranch, with 2 car garage on 1/2 acre that would sell for around $170K. Taxes are $1400/year. Your cost of living is outragious - way more than one should have to pay.

All that being said, the SECOND my husband can retire in about 7 years, we will leave NY for good. People are absolutely insane trying to retire on Long Island. It just ain't worth the $$$.

I certainly don't blame you. Take that hefty capital gain from the house and move out of the big city - you'll not have a house payment again.