Tax Returns with $10 Million Income or More
|Year|| Number || Total AGI ($1,000s) || Taxes Paid ($1,000s) || Share of Total Taxes |
The chart above shows some federal income tax data for "mega-rich" Americans, those with annual income of $10,000,000 or more. Note the following:
1. When the economy was booming before the recession started, the number of "mega-rich" Americans reporting income of $10,000,000 or more reached a peak of 18,394 in 2007, almost double the number in 2004 just three years earlier. In 2007, the "mega-rich" represented only 0.0129% of American taxpayers (a little more than 1/100 of 1%), or just one in 7,773 taxpayers. And yet that small group of "mega-rich" paid nearly 10% of all federal income taxes paid that year. It seems like this elite group should be honored as national heroes for shouldering such a hugely disproportionate share of the national tax burden, and not vilified or accused by Warren Buffet of being "coddled" and "protected" by a "billionaire-friendly Congress" and being "spared from the shared sacrifice" that the rest of society supposedly suffers from.
"Those with $10 million or more in reported income fell to 8,274 in 2009 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51% (see chart, from $110.8 billion in 2007 to only $53.7 billion in 2009). These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009."
3. From the Tax Foundation blog
"Mr. Buffett wants those making more than $10 million per year to pay even more [in taxes]. The table below exhibits the effect of imposing a 100% tax effective rate on these individuals (MP: Instead of paying $53.7 billion taxes as they actually did in 2009, we now assume that their entire $240 billion of income (AGI) was confiscated through taxation, raising an additional $186 billion in tax revenue):
Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent. There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand."
Bottom Line: As the WSJ points out, "If Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not campaign to tax them more."
What we really want is a strong economy that could bring the number of "mega-rich" taxpayers back above 18,000 like in 2007, with an advantage that tax revenues from that group would double to more than $100 billion again. That would be a much more effective way to raise tax revenues from the super-rich than raising marginal tax rates on Buffett and his super-rich friends as he proposes. Raising tax rates simply increases the "membership fee" of joining Buffett's elite group and could reduce the number of Americans willing and able to enter the "mega-rich" club.