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.
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