Do you know that old saying that figures don’t lie, but liars can figure? Well, much hyperbole came out of the election regarding who is in the top 1% of income earners, and who pays what in taxes. A lot of the stats were misused or misquoted. Here are the latest figures that IRS recently released for 2010:
If you are in the top 50% of income earners, your Adjusted Gross Income (AGI, line 37 on your 1040) was at least $34,338. You paid an average tax rate of 13.1% on your AGI, and your group as a whole paid 97.6% of all federal income taxes.
If you are in the top 25% of income earners, your AGI was at least $69,126. You paid an average tax rate of 15.22% on your AGI, and your group as a whole paid 87.1% of all federal income taxes.
If you are in the top 10% of income earners, your AGI was at least $116,623. You paid an average tax rate of 18.4% on your AGI, and your group as a whole paid 70.6% of all federal income taxes.
If you are in the top 5% of income earners, your AGI was at least $161,579. You paid an average tax rate of 20.6% on your AGI, and your group as a whole paid 59.1% of all federal income taxes.
And if you have managed to be in the top 1% of all income earners, your AGI was at least $369,691. You paid an average tax rate of 23.4% on your AGI, and your group as a whole paid 37.4% of all federal income taxes.
Note that if these rates were calculated based on Taxable Income instead of AGI, the rates shown would be much higher.
So the next time Warren Buffet is bending your ear at a cocktail party about fairness and tax rates, ask him if he thinks it’s fair that only 10% of the population shoulder the burden of 70.6% of all income taxes.