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View Full Version : Richest Americans’ Income Doubled as Tax Rate Slashed



TimH
02-02-2009, 04:33 PM
Just be glad Bush is gone.


Jan. 30 (Bloomberg) -- The average tax rate paid by the richest 400 Americans fell by a quarter to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million, new IRS data show (http://www.irs.gov/pub/irs-soi/06intop400.pdf).
The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.
The drop from 2001’s tax rate of 22.9 percent was due largely to ex-President George W. Bush (http://search.bloomberg.com/search?q=George+W.+Bush&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1)’s push to cut tax rates on most capital gains to 15 percent in 2003.
Capital gains made up 63 percent of the richest 400 Americans’ adjusted gross income in 2006, or a combined $66.1 billion, according to the data. In all, the 400 wealthiest Americans reported a combined $105.3 billion of adjusted gross income in 2006, the most recent year for which the IRS has data.
“The big explosion in income for this group is clearly on the capital gains side, although there are also sharp increases in dividend and interest income,” said Dean Baker (http://search.bloomberg.com/search?q=Dean+Baker&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), co-director of the Center for Economic Policy and Research in Washington.
In addition, “they are realizing more of their gains due to the lower tax rate,” Baker said.
The data show that the population of the top 400 income- earners has fluctuated over the 15 years the agency has tracked it, according to an analysis by the Washington-based Tax Foundation, a research group. Some 3,305 different taxpayers have been included at least once on the list, the Tax Foundation (http://www.taxfoundation.org/blog/show/24260.html) said. Only 27 percent of those taxpayers have appeared more than once on the list, and only about 15 percent have been on it more than twice.
Ammunition for Democrats
The data may provide ammunition for Democrats such as House Speaker Nancy Pelosi (http://search.bloomberg.com/search?q=Nancy+Pelosi&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) who say they intend to increase the capital gains tax rate even as the credit crunch roils markets and is producing more investment losses than gains.
President Barack Obama (http://search.bloomberg.com/search?q=Barack+Obama&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) pledged during the presidential campaign to increase the rate. He has said he wants to let the rate rise to 20 percent for families making more than $250,000 and eliminate it for small businesses.
“My guess is that Obama still will not rush to do anything on this” because of likely negative reactions from Republicans and the stock market, Baker said. “We’re talking late in the year or early next year.”
The richest 400 Americans collectively paid $18.1 billion in taxes in 2006, the highest in the 15-year period and 1.77 percent of all income taxes paid in the United States; on an inflation- adjusted basis, the dollar amount was the highest since 2000.
To contact the reporter on this story: Ryan Donmoyer (http://search.bloomberg.com/search?q=Ryan+Donmoyer&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Washington at rdonmoyer@bloomberg.net