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Len Burman notes that the rich really are different from you and me. They're really, really, rich. And not facing terribly much in the way of taxation. Burman picks through some of the new IRA data and discovers:
In 2005, the average tax return in the fabulous 400 reported $213.9 million of income, up from a mere $172.8 million in 2004. They’re even doing better than at the peak of the dot.com bubble in 2000, when the top 400 raked in $173.9 million ($197.1 million in 2005 dollars). Overall, this group, which comprised 0.0003 percent of the tax returns filed, earned 1.15 percent of all income reported.The cool thing about being incredibly well compensated is that you don’t have to pay much tax. Their average income tax bill was 18.23 percent of income. Including payroll taxes, their average rate was still under 19 percent (my calculation, assuming all wages and salaries, business income or loss, and partnership income or loss are subject to the Medicare payroll tax). The IRS reported that only 106 out of the 400 paid an average income tax rate over 25 percent...While their pre-tax incomes have been exploding, their tax rates have been falling. From 1993 to 1996, their average tax rate was 28.8 percent. After tax rates on long-term capital gains were cut in 1997, the rate fell to an average of 22.4 percent from 1997 to 2001. (Capital gains average well over half of income for the 400.) Now, after top income tax rates were cut from 39.6 percent to 35 percent and top tax rates on capital gains and dividends slashed to 15 percent, their average income tax rate is 18.2 percent.But what can we do, really? I mean, if his tax rate shifted up to 25 percent, and Sergey Brin (who looks oddly like Zach Braff) found a few million less in his $18.5 billion, he'd almost certainly shut down Google, or move it to China or something. And then where would we be?
