Home Business Taxpayer Income From 400 Wealthiest Americans Soars

Taxpayer Income From 400 Wealthiest Americans Soars

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The wealthiest 400 taxpayers in the US paid a lower effective tax rate in 2010 than they have in recent years, tax data released by the IRS shows. What’s more, their income increased significantly.

Taxpayer income

Taxpayer income 31% higher in 2010 than in 2009

In 2010 the elite 400 reported taxpayer income 31 percent higher than in 2009, as stock prices fueled gains on the back of quantitative easing as the US began to pull out from a recession. On average incomes of the top 400 paid 18 percent in federal income taxes, down from 19.9 percent in 2009. The lowest tax on the top 400 was 16.6 percent in 2007, a report pointed out.

Taxpayer income

The IRS data shows that the top 400 tax payers now receive twice the share of national income that they did in 1995, a Bloomberg noted. The elite 400 took home 1.31 percent of all adjusted gross income in the U.S. in 2010 and paid 2.01 percent of the income taxes, though they make up less than 0.001 percent of the population, the report noted.

Taxpayer income

Taxpayer income in the form of capital gains

The key point for this effective lowering of tax rates started when capital gains taxes were lowered starting in 1997. This resulted in more the top taxpayers earning more income in the form of capital gains than in salary. In 1997 the top taxpayers made 7.41 percent of their income from capital gains.  In 2010 that number had almost doubled to 14.03 percent, the IRS data showed.  Under tax laws, the top rate for long-term capital gains and dividends was 15 percent while in 2010 the top rate on wage income was 35 percent. Most middle class families earn most of their money in wages while the wealthiest Americans earn a larger percentage of their income through capital gains.

Taxpayer income

However, tax laws are beginning to change. President Barack Obama has expressed interest in raising the amount the wealthy pay. His plan, which hasn’t advanced through Congress, is to place limits on top taxpayer deductions as well as tax the carried interest of private-equity managers as ordinary income as opposed to capital gains.

Taxpayer income

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