Government

Millionaire Households in America 

Democrats delight is hammering Americas millionaires and billionaires as if they don’t pay their fair share and can be used as the sole source of funding to cure our country’s fiscal and social problems. The reality is they do pay a fair share (judgement) and there are not enough of them to do what liberals would like. 

In addition, there are numerous laws and regulations from retirement saving to taxing Social Security,  paying for Medicare premiums and the AMT that limit benefits or add taxes for higher income individuals (not that high). However, there is one area where there is a great advantage for the super, super wealthy which is the tax rate applied to dividends. 

Let’s look at the wealthy in America. 

For most recent data available, 534,000 tax returns showed an income of $1,000,000 or more. That’s out of about 152,544,000 total returns in 2016 equal to 0.35%. The number of such returns varies widely and rarely do households file returns of $1,000,000 or more in consecutive years. 

According to CBS Marketwatch, in 2012 (the latest data available), the top 400 earners reported average income of $335.7 million of which $54 million was dividends.  You could confiscate 100% of the earnings of the top 400 and it would cover federal spending for about thirteen days.

And what about all those millionaires and billionaires? 

Depending on the source, there are between 540 and 565 billionaires in the U.S.  Of course, that is net worth (not income) and most of that money is in investments of one kind or another. It doesn’t take much for Americans to be millionaires which isn’t what it used to be. Add in retirement savings, a home and a few other assets and over the years many people will be “millionaires.” In 1961 when I graduated from high school I wanted to be a millionaire someday, but in 2017 I would need over $8,000,000 to make that dream come true in current dollars. 

There are almost 30 million (29.8 million) households with a net worth between $100,000 and $1 million, Not Including Primary Residence. That number indicated an increase of approximately 600,000 households. 

The number of households with between $1 million and $5 million in net worth climbed above the nine million mark to 9.1 million, an increase of approximately 300,000. ·        

There are 1,210,000 Ultra High Net Worth households with a net worth between $5 million and $25 million. That number grew by more than 40,000 households ·        

There are 3,000 more households with a net worth above $25 million, reaching 145,000 total.

Source: Number of Millionaire Households Reaches All-Time High

What’s a fair share?

In 2014, people with adjusted gross income, or AGI, above $250,000 paid just over half (51.6%) of all individual income taxes, though they accounted for only 2.7% of all returns filed, according to our analysis of preliminary IRS data. Their average tax rate (total taxes paid divided by cumulative AGI) was 25.7%. By contrast, people with incomes of less than $50,000 accounted for 62.3% of all individual returns filed, but they paid just 5.7% of total taxes. Their average tax rate was 4.3%.

All but the top-earning 20% of American families pay more in payroll taxes than in federal income taxes, according to a Treasury Department analysis.

Still, that analysis confirms that, after all federal taxes are factored in, the U.S. tax system as a whole is progressive. The top 0.1% of families pay the equivalent of 39.2% and the bottom 20% have negative tax rates (that is, they get more money back from the government in the form of refundable tax credits than they pay in taxes).      

Source: Pew Research Center

Advertisements

2 replies »

  1. You state: “… All but the top-earning 20% of American families pay more in payroll taxes than in federal income taxes, according to a Treasury Department analysis. …”

    I don’t doubt that is accurate.

    However, it is misleading. In at least two ways:

    First, payroll taxes are paid based on wages earned. Income taxes are paid, based on taxable income – and then, income taxes are only due where they exceed available credits. Some credits are, in fact, refundable – so, a sizeable minority of Americans not only do not pay income taxes, but, receive money paid by other taxpayers. Why would (should) anyone be surprised that a significant majority of Americans pay more in payroll taxes than in income taxes when payroll taxes are calculated on a separate basis – where there are no “earned income credits”, standard deductions, personal exemptions, etc. Many argue that such a system is somehow not “progressive” – because the taxes are accorded the same treatment when it comes to accounting/federal budget purposes.

    Second, the only thing that is more regressive than the payroll taxes people pay are the benefits those taxes fund. That is, Social Security and Medicare are much, much more progressive, taxes relative to benefits, than the rest of the federal budget and spending, which is primarily funded with income tax dollars. So, as far as I am concerned, anyone who is paying in more in payroll taxes than they do in income taxes, who thinks payroll taxes are unfair can stop paying them and forego the benefits.

    Like

  2. It is time to come to an agreement on what a millionaire is, assets or income, but I realize that will never happen. If you have assets you want to feel rich and call yourself a millionaire. If you have to pay taxes, you want to be defined by annual income or you will be taxed into being poor. Just because you have money saved for retirement doesn’t mean you have a million dollars a year of income to spend.

    Once again that term “fair share” is all in how you spin it. 56% of the people who filed income tax forms in 2014 paid less than $5. More than likely due to tax credits, they got more money back than they paid in taxes. So how is that fair that 56% of the filers do not pay anything? If they paid $10 at least they paid something. To me, fair would be a flat tax. The poor would pay a $1 while the higher income (note not the rich by assets) may $10,000 or whatever the flat percentage would be. The rich are already penalized for owning property and are taxed for that too. Their earned interest and capital gains are taxed, which “poor” people supposedly don’t have except for all those workers with 401K or IRA plans at which time they may be taxed at a later date.

    When I see the lifestyles of the rich and famous throw $100k parties, I feel that all that money is wasted and it makes me sick because 1) I can’t do that but would like to do that once, and 2) that the government wants to tax that money. The government fails to realize because of those parties and fancy boats and resorts, people have jobs and suppliers have a place to sell their products and everybody wants to try just a little bit harder to be that millionaire. Or we could all be socialist and have nothing more and nothing less than the person next to you.

    Like

What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s