Who Pays The Top Income Tax Rate?

@DavidCayJ

President Obama wants to raise the top marginal income tax rate on salaries and other ordinary income from 35 percent to 39.6 percent by letting the extended temporary Bush tax cuts expire at year-end.

Mitt Romney wants to drop the top rate by a fifth to 28 percent (and running mate Paul Ryan has called for a top rate of 25 percent).

So who pays the 35 percent rate? How much do they pay? And how much more would they pay if the Clinton-era rate of 39.6 percent were restored?

As this graphic shows, had the 39.6 percent rate been in effect in 2009, a few people making as little as $100,000 to $200,000 would have been affected. The total increase per taxpayer in that large group would be less than a penny each.

The tiny group of 8,274 taxpayers who made more than $10 million in 2009, and collectively reported 3.1 percent of all the adjusted gross income that year, would pay on average $687,500 more if the permanent Clinton rates return.

That is 2.4 percent of their average $29 million adjusted gross income.

The reason the increase is not 4.6 percentage points (the difference between 35 and 39.6) is that only about half of their money is ordinary income, while much of it is long-term capital gains and qualified dividends taxed at 15 percent.

And why do 715 of the 13.5 million taxpayers in the $100,000 to $200,000 group pay the 35 percent rate, which formally starts at $372,950? Blame it on the complexities of the tax code.

Advertising

Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

American History Proves We Can Still Save Democracy From Trumpism

The Lincoln Memorial

Have you ever thought about the role guilt has played in our national life? It’s not omnipresent, it’s certainly not felt by everyone, most especially those sinned against, but I would say guilt rivals pride as the thing that has most motivated us. Think about it for a moment. The founding of this country wasn’t an immaculate birth – for one thing, there wasn’t a Founding Mother among all those long-heralded Founding Fathers, and one of the two greatest mistakes they made the day they came to an agreement on our founding document was what they left out. They didn’t award women full citizenship, and they failed to deal in any way with the sin of slavery.

Keep reading...Show less
How Fox Props Up The House Republicans' Impeachment Farce

Sean Hannity

Fox News propagandists are still eagerly shoveling Rep. James Comer’s (R-KY) slop to their viewers, nearly one year into the House Oversight Committee chair’s shambolic campaign to damage President Joe Biden’s political standing by focusing on his son Hunter Biden’s business dealings.

Keep reading...Show less
{{ post.roar_specific_data.api_data.analytics }}