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For Top 400 Taxpayers, a Near-Record Year

America’s contemporary rich, new IRS data show, didn’t quite match their all-time income record in 2008. But they scored their second-highest showing ever, despite the Great Recession. Their average income: a stunning $270.5 million.

In 2008, the IRS revealed yesterday, 400 Americans reported at least $110 million in income on their federal tax returns. These 400, in a year that ended with the U.S. economy in meltdown and millions out of work and home, averaged $270.5 million each, the second-highest top 400 average income on record.

The IRS only started reporting top 400 income calculations in 2003, and the official top 400 totals just go back to 1992. But older IRS data reports do make top 400 estimates from some earlier years possible. And these earlier figures leave the latest IRS numbers in even starker relief.

In 1955, for instance, America’s top 400 averaged — in 2008 dollars — $13.3 million. In other words, the top 400 in 2008 reported incomes that, after taking inflation into account, amounted to more than 20 times the incomes of America’s highest-earning 400 a half-century ago.

But 1955’s top 400 didn’t just make far less than 2008’s top 400. The rich in 1955 paid far more of their income in taxes than today’s rich. In 2008, the new IRS data show, the top 400 paid only 18.1 percent of their total incomes in federal income tax. The top 400 in 1955 paid 51.2 percent of their total incomes in tax.

After taxes, and after adjusting for inflation, 2008’s top 400 had a staggering $85 billion more left in their pockets than 1955’s most awesomely affluent.

You don’t have to go all the way back to 1955 to see how little today’s top 400 are paying in taxes. In 1992, the IRS stats detail, only 33 of the top 400 paid less than 20 percent of their incomes in federal income tax. In 2008, 253 did.

In 2008, the top 400 paid only 18.1 percent of their total incomes in federal income tax. The top 400 in 1955 paid 51.2 percent of their total incomes in tax.

The main reason: Today’s rich are getting more and more of their income from capital gains — the profits from buying and selling stocks, bonds, and other assets — and these capital gains now face a substantially lower tax rate than they did two decades ago.

In 1992, the top 400 grabbed 26 percent of their income from paychecks and 36 percent from capital gains. In 2008, by contrast, only 8 percent of top 400 income came from salary — 88 of the year’s top 400 didn’t even have jobs — and 57 percent came from capital gains.

These 2008 capital gains faced only a 15 percent tax rate, down from a 1992 rate almost twice that high.

Incomes for the 2008 top 400 did dip from top 400 levels in 2007, a year that saw the top 400 average $344.8 million. But the dropoff from 2007 to 2008 turned out to be less steep than the dip in 2000 after the dot-com bust.

America’s richest came roaring back, fairly fast, from that dot-com setback. How fast will the next comeback be for America’s super rich? We won’t know for sure until next spring, when the IRS releases top 400 income figures for 2009.

We can, in the meantime, do some reasonable surmising. Next year’s top 400 figures for 2009, we can predict with some confidence, figure to be real stunners. One statistic behind that confidence: In 2009, we already know, the financial industry’s top 25 hedge fund managers averaged a record $1.01 billion, over double the $464 million hedge fund top 25 average in 2008.

  • Anonymous

    Swinney Weekly Rant

    Yes Rod.
    1945-1980. America ranked high on Gini Equality scale
    Today, at bottom of list.
    2% need Tax Cut own 50% all Financial Wealth.
    120,000,000 workers own 7%. Banana Republic
    2% need s Tax Cut take 30% all individual income.
    2% include these annual incomes.
    9 million of them have an income of 1 million plus as high as 4000 Million-3000 million-2000 million-1000 million-500 million-100 million-50 million-10 million 1 million.
    How can anyone give them a tax cut with 25 million unemployed or under employed, millions getting kicked out of new homes, financing two dumb wars
    on and on the list goes.
    That top 2% got a 60% Tax Cut from Reagan which began huge redistribution upwards. Bush II borrowed 6000 Billion. Who profited? The Rich. Bush borrowed money to help the rich and indebted our children for many years.
    The Middle Class worker had no pay increase in real dollars since 1979
    Top 1% got 281% increase..
    Today, America is third from top of least taxed nations.
    Under taxed? Yes! Overspent? Yes!
    Facts hurt. Truth hurts.
    If we not reverse the trend line of former great empires we will join them.
    Their history trend line was upward on Imperialist interventions world wide and Debt..
    Look familiar? History will record the first six years of Bush as worst in history.
    Want more of it? Send Republicans into the White House and Congress.

    From 1921 their domestic record is abominable. Awful.
    Democratic Presidents wipe out Republican Presidents on each domestic measurement. JOBS-GDP-INCOME
    JOBS–D =1,800,000 per year—R=800,000
    More than twice as many
    1980-2010–20 years of R presidents got 99,000 net new jobs per month,
    Carter + Clinton in 12 got 222,000 or more than twice as many per month.
    Those 20 years got us involved in 10 foreign conflicts. 10? Yes. 10
    Want War? Hire a Republican.
    Want Depression. Hire a Republican
    Want Recession? Hire a Republican

    Fact Check–Each “significant” recession in 20th century was under a R President. Wow! Ouch! Yuk!

  • Anonymous

    A Consumption tax will solve this and tax all Americans equally.  The “rich” will pay more because they buy more and higher quality than the rest of us.  It will bring manufacturing jobs back to the states because of Direct Taxation.  
    If it is felt the wealthy do not pay enough, albeit they pay most and labor less, smarter etc. like George Soros for example, go ahead and take his money away from him and have a public flogging.  You of course cannot do this because he keeps his money elsewhere and away from US taxes.
    Bush borrowed (through Congressional help) more than he should have been allowed to do—That does not justify BHO (through Congressional Socialist help) doing 5 times as much!
    We are all absorbed in diverted nonsense trying to figure out who is to blame for our standard of living being lowered and wealth (we don’t have) being re-distributed by stupidity.
    The real culprits started this in 1913 and have been sucking this country off and we need to get rid of them and change the tax system from “Direct” government theft to a fairer “Consumption” tax.  

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