More on Taxes

[Peter_Puget]

Interesting news:

 

The IRS has just released new tax data for 2001. They show that the share of total income taxes paid by the wealthy fell for the first time in many years, and rather sharply as well. In 2000, the top 1% of taxpayers--ranked by adjusted gross income--paid 37.4% of all federal income taxes (excluding payroll, estate and other taxes). In 2001, this share fell to 33.9%. This data will undoubtedly be used to show that the Bush tax cut benefited the rich disproportionately.

 

However, a closer look at the data indicate that the tax share decline was due entirely to the stock market collapse and the recession. The aggregate AGI of the top 1% fell by $243 billion, reducing their share of total AGI from 20.8% to 17.5%. The income threshold for those in the top percentile fell from $313,469 to $292,913. This fall in income is what led to a decline in aggregate tax payments by this group from $367 billion to $301 billion.

 

Proof that the tax cut was not responsible for the falloff in taxes paid by the very rich is shown by the fact that the average tax rate they paid actually went up slightly, from 27.45% in 2000 to 27.5% in 2001.

 

For the first time, the IRS has broken down the figures for the very wealthy into finer detail. Previously, data were available only for the top 1% and top 5%. Now, data is provided for the top 0.1% and the top 2%, 3%, and 4% in addition to the usual data.

 

IRS Link