Important Update
Newly Released IRS Data Updates Top 400 Data in the Book
John Gaver
New IRS Data on TOP 400 Taxpayers Available
If you've read "The Rich Don't Pay Tax! …Or Do They?" then you know that an entire chapter of the book is dedicated to analyzing tax collections data for the Top 400 Taxpayers. But as noted in the book, the most recent data available for the Top 400 Taxpayers, at the time or publication, was for the 2008 tax year. As also mentioned in the book, the IRS releases new data every year, on a very loose schedule. Well the new Top 400 Data is now available.
The IRS has released its 2009 Collections Data on the Top 400 Taxpayers and the implications are frightening. As you read through this information, keep in mind that the Top 400 Taxpayers represent just one three-millionth of all taxpayers.
Before going into those implications, the following two tables present the highlights from the 30 tables in that report. But as I always like to tell my readers, "I'm only the messenger. You should always go to the source." So I encourage you to download the entire report from the IRS website, here.
| 2008 | 2009 | Difference | Relative % Difference | |||||
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| AGI Cutoff for Top 400 |
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| Avg. AGI for Top 400 |
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| Total AGI for Top 400 |
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| % of Total US Personal Income |
1.31% | 1.06% | -0.25% |
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| % of Total US Personal Inc. Tax | 1.90% | 1.86% | -0.04 | -2.11% | ||||
| Net Cap. Gains % of 400 AGI |
56.81% | 45.77% | -11.04% | -19.43% | ||||
| Cap. Gains % of US Total |
13.10 | 16.00 | +2.9 | +22.14% | ||||
| Total AGI for all US Returns |
M$8,262,860 | M$7,626,430 |
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-7.70% | ||||
| Tax Rate for Top 400 |
18.11% | 19.91% | +0.018% | +9.94% | ||||
| Income Earned to Tax Paid Ratio | 1.45 X | 1.75 X | +0.30 | +20.7% |
| Number per Rate Band |
Cumulative From Top Down |
Cumulative Percent |
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|---|---|---|---|
| More than 35% | 0 | 0 | 0% |
| 30 to 35% | 82 | 82 | 20.50% |
| 25 to 30% | 77 | 159 | 39.75% |
| 20 to 25% | 39 | 198 | 49.50% |
| 15 to 20% | 86 | 284 | 71.00% |
| 10 to 15% | 89 | 373 | 93.25% |
| Less than 10% | 27 | 400 | 100% |
Do you begin to see a picture developing here?
- The cutoff to be in the Top 400 dropped by almost a third
- The average income for the top 400 dropped by 25%. Can you imagine making 25% less next year, than you made this year?... And that's before taxes.
- The Top 400 accounted for 20% less of Total Personal Income in 2009, than in 2008.
- The Top 400 paid 1.75 times their share, based on income in 2009 and that was up 20% from 2008
- The Real Tax Rate for the Top 400 increased by almost 10%, from 2008 to 2009.
This means that the Top 400 Taxpayers earned less in 2009 and paid more tax per dollar earned. You should also note that while they did pay at a higher rate, per dollar earned, they paid less of the overall tax load. The result is that middle and lower income taxpayers had to make up that difference.
When the wealthy pay less, the poor and middel class pay more. Of course, the wealthy are paying less, since there is less wealth to tax.
But the question that this raises is, "Why are the numbers that should be higher, low and the numbers that should be lower, high?"
This in fact, is just more indication that those who pay the bills for the rest of us are leaving.
While the wealthy abroad are increasing their holdings, the Top 400 US Taxpayers are making less. Does this make sense? It does, but only if you consider that more than a few of our wealthiest taxpayers are leaving and becoming foreign taxpayers.
Just this year, we've heard of two major expatriations - Facebook co-founder, Eduardo Saverin and song writer, Denise Rich. But we only heard of them because of special circumstance. Saverin's expatriation made news because of his Facebook connection and the IPO, and Rich went public, stating that her move was very much motivated by tax planning.
So while these numbers could indicate that US billionaires are just dumber than billionaires in other parts of the world and are therefore not making as much as their foreign counterparts, that's not really likely. That's because, for decades, our wealthy population far out-performed the rest of the world's wealthiest investors. If our billionaires aren't as smart as those in the rest of the world, what has happened to them? The more likely scenario is that our billionaires are leaving and, like Saverin and Rich, are becoming foreign billionaires.
This of course, means that the middle class and the poor will have to pick up the slack in taxes and job creation in the USA. But when was the last time you heard of anyone getting a job from a poor person?...
Remember too, that Zogby reported that more than 3 million US citizens "relocate" offshore every year. Of course, since the poor can't afford to leave all of our social programs behind, we have to reason that most of that 3 million people are at least upper middle class.
Put this all together and you have the makings of an economic disaster of epic proportions, for "Main Street" USA. Make no mistake. This will hurt the middle class far more than the wealthy. The wealthy have the means to avoid the problem and, as these numbers so strongly indicate, many are already doing so.
If your attitude is, "Who cares about the rich? They can afford to pay more tax", then you need to re-think your position. That's because they can also afford to live wherever they want and when the people who pay the bills and create the jobs leave, those who remain will be saddled with a $16 Trillion Debt and nobody left with money enough to pay it off.
If you don't entirely grasp the severity of what you just read, then you probably haven't read, "The Rich Don't Pay Tax! …Or Do They?"
In the book all of this is explained in much greater detail than we have room for here, along with lot's more statistical information. After reading the book, you'll understand even more clearly, just how severe the problems are that face this nation. Of course, in the book, I also provides a thoroughly vetted solution.