The Obamanation

[TheMercenary]

Originally Posted by Redux

Top income earners definitely pay the greatest share of the total federal income taxes (as they should, IMO), but its no where near paying the majority of total federal income taxes (over 50% of the total).

Those same top income earners also consistently see the greatest rise in their income on an annual basis.

This year's numbers show that both the income share earned by the top 1 percent of tax returns and the tax share paid by that top 1 percent have once again reached all-time highs. In 2006, the top 1 percent of tax returns paid 39.9 percent of all federal individual income taxes and earned 22.1 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes.

The IRS data also shows increases in individual incomes across all income groups (see Table 3). Just as the highest earners lost the biggest percentage of their incomes during the recession of 2001, so they have prospered the most as the economy continued to rebound through 2006. For example, from 2000 to 2002, the AGI of the top 1 percent of tax returns fell by over 26 percent. In that same period, the AGI of the bottom 50 percent of tax returns actually increased by 4.3 percent. However, since 2002, as the recession has ended, AGI has risen by over 81 percent for the top 1 percent (an average of over 20 percent per year) and 17 percent (an average of around 4 percent per year) for the bottom 50 percent.

In sum, between 2000 and 2006, pre-tax income for the top 1 percent of tax returns grew by 34 percent, while pre-tax income for the bottom 50 percent increased by 22 percent. All figures are nominal (not adjusted for inflation).

This pattern of income loss and growth at the top of the income spectrum is the same during every recession and recovery. The net result has also been a sharp rise in federal government tax revenue from 2003 to 2006 compared to previous years.

The top-earning 25 percent of taxpayers (AGI over $64,702) earned 68.2 percent of the nation's income, but they paid more than four out of every five dollars collected by the federal income tax (86.3 percent). The top 1 percent of taxpayers (AGI over $388,806) earned approximately 22.1 percent of the nation's income (as defined by AGI), yet paid 39.9 percent of all federal income taxes. That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns.

http://www.taxfoundation.org/news/show/250.html