Friday, January 30, 2009

Earnings of the Richest 400 Americans

This was buried in the Business section of the NY Times today-- the IRS has released statistics on the 2006 income and taxes for the wealthiest 400 Americans.

The income of the 400 wealthiest Americans swelled in 2006, soaring nearly 23 percent from the previous year, to an average of $263 million, according to data released Thursday by the Internal Revenue Service. Since 1996, this group has nearly doubled its share of all income earned in the United States.

The top 400 paid just more than $18 billion in federal income taxes in 2006, or an average of $45 million, on a record $105 billion in total income — the lowest effective tax rate in the 15 years since the agency began releasing such data.

How lovely for them.


Anonymous said...

I always admire Warren Buffet for saying that he thinks he should be paying more tax!

MEG said...

Yeah but those top 400 tax returns don't represent the same people year after year. Wealthy people who get their income from captial gains and businesses and oil and real estate have much more volatile income than the rest of us.

Some of my wealthy clients make $5M one year and $1M the next and then lose $3M and then make $6M.

Jason M. Stokes said...

I pay a higher rate than that, and I'm certainly no where near that income level. How depressing.

Gord said...

That's the tax system at work......almost anywhere in the free world. Employment income is always taxed higher than investment income. I never much liked what Rich Dad philosophy said ( the poor and middle class say get good grades, and get a good job with benefits, the rich say buy income producing assets - less tax). However, despite me knowing that, I continue to expect to do well by just having a good job. I have no one but myself to blame if I really wanted to be wealthy; all the info is out there.

moocifer said...

@ "Yeah but those top 400 tax returns don't represent the same people year after year. Wealthy people who get their income from capital gains and businesses and oil and real estate have much more volatile income than the rest of us. "

a) I don't think that's a correct for this subset of highest earners--the top 1% of the top 1%.. If you look at the historical earnings of the top 400 you will likely find that most of them are consistently in the top 400 year after year. Secondly even if we established that those having an average income of 263 million in 2008 have been subject to volatility in their income on a year-to-year basis, anyone who is coming from anything like a "base" of 260 million in income has a long way to go to be even remotely hurting.

@ "Some of my wealthy clients make $5M one year and $1M the next and then lose $3M and then make $6M"

well, they have a capital gains/loss carryforward from the "losing years". Regardless, people who make a mere 10 Million are not even close to being on the list of the top 400 earners.

Nick said...

Everyone always focuses on the rich/poor gap. What about the wise(smart)/ignorant(stupid) gap?

Should we not reward those who are smart and fuel our economy be creating wealth and jobs by lowering the tax they and their companies pay? In reality companies don't pay tax anyway, their customers pay it in higher price goods.

Engineering a system whereby the less wise citizens pay a higher premium (tax) for their lack of productivity and wealth creation seems to reward the right type of behavior that would be good of society, rather than punishing the productive citizens with larger tax burdens than their counterparts.

moocifer said...

@ nick, or rather, at your argument:

At an earnings level of 260 million, you don't need "incentives" for the right type of behavior. I am guessing 260 million is plenty of incentive all by itself. And in any case, such people do not create that productivity by themselves, rather they benefit from the massive leverage that their capital gives them. They have legally managed to position themselves at the top of a pyramid that is supported by thousands, if not tens of thousands, of lesser-compensated people, and have the advantage of being able to leverage their wealth and influence to gather (notice I did not say "create") even more wealth to themselves.

That's why the top 0.1% have increased their wealth so significantly compared to the rest of the population--because of their accrued advantage, not strictly because of their merit or "productivity". When you have 260 million in income in one year, you get credit for a lot of productivity that actually doesn't originate from you per se, but from your possession of capital.

Andrew Stevens said...

I always admire Warren Buffet for saying that he thinks he should be paying more tax!

Don't admire Buffett. That's one of the most disingenuous things I've ever heard in my life for two reasons. 1) There is nothing stopping Buffett from voluntarily writing large checks to the U.S. Treasury, but he does nothing of the kind. 2) When you are the richest man in the world and have already made your fortune, increasing taxes on high-income earners now is the best way to maintain one's edge. Moreover, Buffett is normally in favor of raising income taxes, but he pays very little in the way of income taxes. He pays almost exclusively capital gains taxes. I also note that Buffett isn't in favor of a wealth tax which would actually impact him. Buffett also favors the estate tax, which he has made a lot of money off over the years, but which he has no intention of paying himself. (His wealth is going to Gates's charity and the charitable foundations he has created for his children so they can continue to use his wealth to buy access to the corridors of power through philanthrophy.)

Buffett is an admirable man in many ways, but this isn't one of them. Here, he's simply being adept at pulling the wool over people's eyes.

Anonymous said...

Funny that we can see that the wealthy are clearly getting wealthier but seem to be paying less tax. Is there something wrong here?

Anonymous said...

I am one of the people who need to be a millionaire or find a millionarie that woule be able to help me save my home of twenty nine years. I am a senior citizen who is trying to survive on thirteen hundred and fifty dollars a month. We are going to lose our home that is for sure. My husband has been disabled since 1994 he was in a terrible truck accident. The fork lift driver hit one of the pallets. when my husband was on the very top of his load. The pallet hit my husband and knocked him down to the payment below. He crushed his back and one foot. He has not been able to work since that time.

I am very ill my self with a illness called Fibromylgia which is a disease that attacks all my muscles, tendons and nerves through out my whole body. I am in pain 24/7 all day and night. I cannot work at all.

I am asking for help from someone that is a millionaire or billionaire who can see them selves in this situation.

We are receiving thirteen hundred and fifty dollars a month. That is not even close to making our house payment which is almost one thousand dollars a month and all the bills we have every month. We have been living off the funds from our savings account which is almosted depleted at this time.

I also had to cancel my health insurance because the cost went up to seven hundred dollars a month coverage for myself only. I cannot pay that amount. So should I have a flair up and my body starts attacking my vital organs I will not be able to go to any hospital or see a doctor.

All the statements I have made are all the God's honest truth. I need a helping hand. Can you step into my shoes for a day and think there go myself, but for the grace of God goes I.

I need a God send please take a moment and read my story and if you could help I would be so grateful. I do not have the words to thank you. Grace