The Fab Four Hundred and the deficit

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The Obama administration has released a report on the richest 400 taxpayers in America. A report the Bush administration was sitting on. The table compiled by David Cay Johnston shows how their income has gone up and their tax rates gone down.

http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument

Effective tax rate of 29.93% in 1995 when their average income was a mere $50,863,000. Tax cuts from Clinton and the Republican Congress dropped this to 22.02% by 1998. Bush tax cuts of 2003 dropped it to 16.62% by 2007 when the richest 400 had an average income of $344,759,000.

If those richest 400 had paid the same rate as they did in 1995, the Government would have taken in another $18.35 billion. Not enough to impact the deficit, but still pretty significant, especially since the government only spent $5.5 billion on SCHIP and $2.6 billion on LiHeap and $20.9 billion on TANF. So compare welfare to the needy at $20.9 billion versus welfare for the richest 400 at $18.35 billion. The latter one is $45.8 million per person.

Of course, conservatives bristle when tax cuts are compared to welfare, because rich people earn their multi-millions and the Robin Hood government takes it away. It's sorta hard for me to figure how somebody can EARN $10.95 per second (even while they are sleeping). I suppose if somebody did six heart surgeries per day at $50,000 per surgery and did it 5 days a week and 52 weeks a year then they would make a mere $78,000,000 compared to an average of $344,759,000 for the top 400. Or if you were a realtor who sold $2,000,000 in property every day with a 6% commission you would make $31,200,000 per year, less than one tenth of the top 400. So I don't see how $300,000,000 is ever earned, especially when it likely comes from a huge pile of money which is generating capital gains and dividend and interest income.

The cummulative loss since 1995, including 4% interest, totalled $88.7 billion in 2007. Again, a mere drop in the deficit bucket, but the fab 400 are also just the tip of the wealthy iceberg.

Their share of income was just 1.59% of all income. That is way up from the .49% it was in 1995, but still a fairly small slice. In 2005, those with incomes over $10 million (and there were 13,776 such families, including the fab 400) got 5.1% of all income. A table follows

income - number - percent of income (2005 IRS data)
>10,000,000 - 13,776 - 5.1
>5,000,000 - 21,431 - 2
>2,000,000 - 84,070 - 3.4
>1,500,000 - 56,615 - 1.3
>1,000,000 - 127,925 - 2.1
>500,000 - 524,506 - 4.8 (total 18.7% to top .67% of filers)
>200,000 - 2,737,802 - 10.6 (total 29.3% to top 2.67% of filers)
<25,000 - 57,898,144 - 9.2
all filers - 134,372,678

The families in the top 10% had 48.6% of the taxable income in 2005 and they benefitted tremendously from the Bush and Clinton tax cuts. In 2005 the average tax rate for incomes between $2 and $5 million was 24.4% compared to 29.2% in 2000 and 30.9% in 1996 (that does not look like a huge drop, but 1.7% of $3 million is $51,000) . For incomes over $10,000, 000 it was 20.9% in 2005, 25.4% in 2000 and 30.9% in 1996 (this is an estimate since the IRS figures for 1996 do not break down incomes over $1 million, those making over $10,000,000 may have been paying a higher rate than the over $1 million average or a lower rate like they were in 2000 and in 2005.)

The difference in revenue between 2005 and 2000 is $150 billion (that is, if 2005 incomes were paying the same rates that they did in 2000) and the difference between 2005 and 1996 was $212.9 billion. The deficit was $318 billion in 2005, so the tax cuts for the top 10% caused about 60% of it. The revenue lost in 2005 from people making over $2,000,000 was over $60 billion. $60,000,000,000 that went to the wealthiest 120,000 families in America in 2005 alone. This compared to $31 billion for Veteran's benefits, 20.9 billion for TANF or 53.8 billion for food stamps.

If you are really concerned about the deficit, you should support reversing the tax cuts for people making over $2,000,000.