How many people make more than $250,000 per year?

March 21, 2009

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How many people make more than $250,000 per year?

The short answer: based on information from the IRS, fewer than 3% of tax returns (3.924 million returns out of 140+ million total returns) claimed more than $200,000 in adjusted gross income (AGI) in tax year 2009 (more current data is not available). By definition, the number making more than $250,000 must be less than 3% (since some will fall in the range between $200,000 and $250,000.)

The long answer is pretty long – more than a thousand words long, judging by the length of this article. While I am not a CPA , or even a practicing accountant, I do have a degree in accounting and thoroughly enjoyed my income tax courses in college (yep, glutton for punishment). I’ll make an effort not to get too bogged down in technical terms in this article.

Why the question?
For whatever reason, $250,000 has become a benchmark amount. During the 2008 presidential campaign, President Obama had a tax plan that would raise taxes on couples making more than $250,000. A bit later, the US House of Representatives passed a bill that would impose a 90% tax for recipients of bonuses paid by companies that received bailout funds. This tax would be imposed on people making more than $250,000.

Why the source?
The IRS is in the business of determining how much money people make and have a vested interest in the accuracy of their data. I have a synopsis of their data in the table at the end of the post, and have also linked directly to their spreadsheet.

Definition of terms
Household – I am defining a household as any entity that filed a tax return. Note that people who do not have a tax liability are not required to file a tax return. These people tend to be on the low end of the income spectrum.

Income – This is definitely the tricky term. There are a few different things we could measure.

  • Total income (line 22 of form 1040). Essentially, this is the result of adding up the money that comes in from all sources during the year – with the exclusion of tax-exempt interest income and the tax-exempt portion of some retirement benefits. This does include capital gains and business income (or loss). This is the largest of the three amounts I will describe.
  • Adjusted gross income (AGI) (line 37 of form 1040). This is total income with a few deductions. For the typical person, the deductions would be for student loan interest as well as contributions to retirement accounts and health savings accounts. This amount will be smaller than total income, and this is what is used in the IRS statistics that I have used as my source.
  • Taxable income (line 43 of form 1040). This is determined by taking the AGI, subtracting either the standard or itemized deduction, and then also subtracting the amount for exemptions (for tax year 2008, you would multiply $3500 X the number of exemptions – basically, the number of people in your household – and subtract this amount from the AGI.) Taxable income is used to determine your marginal tax rate. (Note: the marginal rate is the rate that is applied to the top slice of your income – it is not applied to your entire income. Income is taxed on a stair step basis, with each chunk of income taxed at a higher rate). In the case of Obama’s tax plan, he would be referring to $250,000 in taxable income, not total income or AGI.

You can quibble with the numbers a bit. You may claim that some people cheat on their taxes, so that the number of people who SHOULD be claiming an AGI of $250,000 is higher than the amount that actually do. You may claim that full-time students or single people should not be counted as households (of course, that argument could be countered by the argument that there are valid households that are not filing tax returns). However, it seems unlikely that you’re going to move the needle very much. The fact of the matter is that very few households earn more than $250,000.

Other stats:
66% of returns had an AGI of less than $50,000. 88% of returns had an AGI of less than $100,000.

0.08% of returns – a total of just 350,000 filers out of a total of 140 million – had an AGI of $1,000,000 of more. This is down from 0.26% in 2006.

8,274 returns – roughly half of 1/100 of one percent – had an AGI of more than $10,000,000. This is down from 15,196 in 2006. Why the sharp decline? A decline in the stock market is a likely explanation.

The average (mean) number of exemptions per return was 2.02. The number of exemptions in the “less than $5000 AGI” category is 1.01 (many are students who are claimed on their parents’ returns and thus cannot take themselves as an exemption) and peaks at 3.05 in the $50,000 – $100,000 range. This makes quite a bit of sense. The lower ranges are often going to have a higher concentration of single people, since those people have half the income of a dual-income married couple in a similar career.

“But nearly everyone I know makes $X. These numbers are wrong.”
I have had people tell me that these numbers are too low, and that $250,000 is not a lot of money in their location (big cities). It might be true – and probably is – that there is a higher concentration of the higher income jobs in the bigger cities. However, the vast majority of the households in these areas are still going to be below $250,000.

I also think that people tend to look at their own situation and assume that it is typical. If you are college educated, you are actually not typical. Only 30 percent of adult Americans have a degree. Likewise, if you have a household income of $100,000, you are not typical.

It’s very easy to fall into this trap, though. Our friends have tendency to have a income level that is similar to our own – even if we don’t make a conscious effort to ensure this. Why? Think of where your base of friends comes from:

Work – If these people have similar jobs, then it’s quite reasonable that their income will be similar to yours.

College friends – Do they have similar majors, and thus similar occupations?

Neighbors – Your neighbors can all afford homes in your neighborhood, which essentially places a floor on their income level.

Parents of your kids’ friends – School districts in many cities are not particularly heterogeneous. This is because certain sections of town have neighborhoods containing homes in a particular price range. If you put an elementary school in the midst of these neighborhoods, the children are going to come from families with similar economic backgrounds.

The Numbers

Table based on data from IRS Website (Excel file)

AGI Returns % cum % % above ex/ret
Under 5000 12,959,560 9.22% 9.22% 90.78% 1.01
$5,000 – $10,000 12,220,335 8.70% 17.92% 82.08% 1.31
$10,000 – $15,000 12,444,512 8.86% 26.78% 73.22% 1.76
$15,000 – $20,000 11,400,228 8.11% 34.89% 65.11% 1.85
$20,000 – $25,000 10,033,887 7.14% 42.04% 57.96% 2.00
$25,000 – $30,000 8,662,392 6.17% 48.20% 51.80% 2.02
$30,000 – $35,000 7,679,458 5.47% 53.67% 46.33% 2.01
$35,000 – $40,000 6,692,189 4.76% 58.43% 41.57% 2.06
$40,000 – $45,000 5,828,859 4.15% 62.58% 37.42% 2.06
$45,000 – $50,000 4,967,553 3.54% 66.12% 33.88% 2.09
$50,000 – $55,000 4,547,861 3.24% 69.35% 30.65% 2.17
$55,000 – $60,000 4,118,100 2.93% 72.28% 27.72% 2.23
$60,000 – $75,000 10,028,933 7.14% 79.42% 20.58% 2.40
$75,000 – $100,000 11,463,725 8.16% 87.58% 12.42% 2.61
$100,000 – $200,000 13,522,048 9.62% 97.21% 2.79% 2.84
$200,000 – $500,000 3,195,039 2.27% 99.48% 0.52% 2.96
$500,000 – $1,000,000 492,568 0.35% 99.83% 0.17% 3.05
$1,000,000 – $1,500,000 108,096 0.08% 99.91% 0.09% 2.97
$1,500,000 – $2,000,000 44,273 0.03% 99.94% 0.06% 2.97
$2,000,000 – $5,000,000 61,918 0.04% 99.98% 0.02% 2.95
$5,000,000 – $10,000,000 14,322 0.01% 99.99% 0.01% 2.92
$10,000,000 or more 8,274 0.01% 100.00% 0.00% 2.91

Column 1 – Range of adjusted gross income
Column 2 – Number of returns that fall into this range
Column 3 – Percentage of total returns
Column 4 – Cumulative percentage (percent of return that have this AGI or lower)
Column 5 – Percentage of returns that are above this range
Column 6 – Number of exemptions per return

Columns 1 and 2 are taken directly from the IRS spreadsheet. The other columns are calculations based on information from the IRS spreadsheet.

Editor’s note: this has become a very popular article. It has been nearly 2 1/2 years since its initial publication. At the time of publication, I used the most current data from the IRS – numbers from the 2006 tax year. On August 8, 2011, I refreshed this article with more current data, this time from the 2009 tax year. If you find this article useful, please help support this site by buying some items using the Amazon links on this page. The Soap Boxers contains articles on a number of topics – come back often! – Kosmo

31 Comments (+add yours?)

  1. Lazy Man and Money
    Mar 22, 2009 @ 15:08:00

    I didn’t realize that $250,000 was a magic number.

    You are right that I look at my own situation and think of it as typical when it really is far from it.


  2. Financial Samurai
    Oct 13, 2009 @ 19:13:52

    I like this post a lot. Well said regarding a delusional assumption that everybody goes to college and makes lots of money.

    On the flip side, there are folks who say that everybody is looking for a job, but if everybody is us, and we are all still working, what’s up with that.

    Is it true that only 2.3% of the population makes $200-500,000, and 0.4% make $500,000-$1million? I find that an amazing stat since 28 year old kids out of Top 20 business schools make $100-140,000 to start. At age 40, they are making 2-5X that.

    Then again, here I got with delusionment. Thnx for the insights and hope to see you at FS one day!

    There are so many cool blogs, I can’t keep track, but leaving a comment at my sites gets me up to speed!

    .-= Financial Samurai´s last blog ..Slapping Hands With Famous People, Saving Money At Events & Priceless Moments =-.


  3. kosmo
    Oct 13, 2009 @ 21:40:02

    @ Samurai – well, those columns are ver batim from the IRS data. I don’t see the IRS as having a political agenda (other than getting more money for its agency), so I trust the numbers more than the numbers of people who have an agenda of some sort (I’m not suggesting that YOU have an agenda, but many groups do).

    Those guys from the top 20 schools … that’s quite an accomplishment, right? Meaning that it’s pretty rare and that they are outliers 🙂

    It’s VERY easy to see the world through the lens of our own life. If you’re a dentist and all your friends are dentists, you’re going to subconsciously overestimate the number of dentists in the world … but how often do you see your dentist? Ah, so the ratio of dentists : people can be pretty high.

    The next time you’re out and about, watch the people you interact with. The garbage man, the barber, the cashier at the grocery store – and, yes, the doctor, lawyer, and the dentist. In the course of a year, I spend a lot more time talking to waitresses and Target cashiers than I do talking to my doctor. Heck, most of the time when I see the “doctor”, I don’t even see an actual MD.

    And that doesn’t even include the multitude of people you never see – the factory worker, the guys who sort packages at UPS, etc.

    Oh, and I have been to your site a few times – I just haven’t made any comments yet.


  4. Financial Samurai
    Oct 17, 2009 @ 22:27:43

    Hey Kosmo – Good stuff man. Didn’t realize you’ve stopped by several times already. Feel free to comment, even if you hate everything I write, b/c I love getting perspective from others.

    You’re right about seeing things through your own life b/c after all, that’s really all one knows. However, everywhere I go, i see copius amounts of consumption, as if there was never a recession. I noticed this during the summer, and as a result, I decided to not sell my company stock and just ride things out.

    In “Fortunes, Fortunes, Everywhere”, I write exactly about what you talk about. I observe incredible amounts of salaries from people who don’t even work! We’re talking $100K+++ pensions for firemen, police officers, longshoremen etc. It’s incredible.

    So, when I see these stats, I do believe in the incredible wealth of Americans, and am pleased we will be able to recover.

    .-= Financial Samurai´s last blog ..You’re Rich And I’m Rich, OK! You’re Still Rich And I’m Not As Rich, Not OK! =-.


  5. Paul Miller
    Apr 04, 2011 @ 13:40:20

    This information is really interesting. After reading Samuelson’s recent ideologically-driven article in newsweek claiming that folks in the “middle class” need to do their share of “sacrifice” to preserve the Social Security system, if the 950,000 or so individuals who make over $500,000.00 gave up their social security benefits (as they really don’t need them–note Samuelson wants people with incomes at $75,000.00 to give up some of their SS benefits), it would amount to something like this
    950,000 x $25,000.00 (a low estimate per year of SS benefits) = 23,750,000,000; or nearly 24 billion dollars a year.
    How come we never hear of these figures, even from the democrats?
    If the government stopped siphoning off all the SS trust fund money with its “IOUs”, there would be trillions in the account.


  6. Taylor
    Apr 14, 2011 @ 22:18:41

    Mr. Miller, while in a perfect world, the folks that did in fact make 500K+ would probably decline SS benefits (and I suspect that many currently do just that), they did pay into it, so they should be allowed to take out if they insist – that is only fair.

    Now I’ll get to my point, and it is a very small one, that being scale. Last week, our government was held up squabbling over $38 Billion, in a budget topping out at $3.3 or maybe $3.5 Trillion. I know, I know, when you look after pennies, the dollars take care of themselves… but scale it down like I did for my 9 and 10 year olds. We are spending $3.30 (or $3.50), and taking in $2.38, so every cycle leaves us $1.17 short. If neither party is aware of how stupid they all look when they can’t agree on cutting $0.038 (less than a nickel, BTW), then we are done here.

    Now take into consideration the $11 to $14 Trillion of accumulated debt. By the same scale, even a 9 year old knows its big trouble. Is it even possible for an individual American to accumulate 6 times annual income in debt (don’t answer that question) without deception? That there (as we say in the South) is a jumbo mortgage indeed!


  7. Eric Engel
    Apr 15, 2011 @ 13:09:18


    I read both Paul Miller and your comments and appreciated them. I also appreciated Kosmo’s article because it answered some nagging numbers questions which keep coming up when conversation turns to raising taxes on the wealthy.

    I wonder if Paul’s idea is worthy of more consideration. I am not sure that it is unfair to follow Paul’s plan. It certainly would be unfair to simply unplug social security benefits from the wealthy, but would it be unfair to implement a policy which proportionally decreased, or cut altogether, social security benefits for individuals who had reached a certain wealth level, with their understanding that that was the law. Hence, one would enter the professional world as a young adult, accumulating wealth with the understanding that if you reached a certain income or wealth level, you would not be eligible for social security benefits. I do not think this would stop individuals from accumulating wealth.

    If the law or policy is raised and passed with public involvement, I would consider it fair. Also, except for the current generation of recently retired, or presently retiring individuals, people would not be caught off guard.


  8. kosmo
    Apr 15, 2011 @ 13:32:12

    Lots of interest in this article recently 🙂

    I’ll have to update the tables when I get some free time (lol), since the article is 2 years old, and the IRS data a bit older than that. However, I wouldn’t expect the distribution to be noticeably different. I tried to show the data is as objective a light as possible, without taking a political stance.

    Have the wealthy give up their social security? I think some of them (Warren Buffett, for example) would be quite open to that idea. However, it’s important to note that social security has a cap. I believe employee/employer only pay in on the first 100K of income (it’s probably an odd amount slightly larger than this – so having Warren Buffett give up his social security isn’t going to single-handedly rescue the program. Social Security is a topic unto itself, but I really think they’ll continue to ratchet up the retirement age until a statistically acceptable percentage of he population dies. I really think that’s the way SS will become balanced again … I’m 35, and my retirement planning does not include social security. If it’s there, great … but if it’s not, I’ll be OK. Better to have the extra money if SS is there than to come up short if it’s not.

    As for balancing the budget … I see the problem as the fact that there isn’t a huge incentive to do so. Politicians have an incentive to fund programs in their districts. What’s see as “pork” everywhere else is seen as an example of “bringing home the bacon” in the congressman’s (or congresswoman’s) home district. What’s going to happen – the lenders are going to foreclose and take the Liberty Bell as collateral? Sure, they could refuse to extend additional credit, but we have nukes up our sleeves. We may not say “give us money or we’ll drop a bomb on you”, but being a superpower is no unlike being the bully – the kids hand over their lunch money without much fuss.


  9. kosmo
    Apr 15, 2011 @ 13:33:20

    Oh … and take a moment to look around the site. We have 800+ articles on a wide range of topic. Some of them probably appeal to you.


  10. MarineMom
    Apr 16, 2011 @ 14:39:37

    Well, I earned in round figures, $36,000 last year. I paid Federal, State, Social Security, Medicare, FICA, and property taxes amounting to $10,000. Another $2,000 for my share of my health insurance. Another $2,000 on my home mortgage. It doesn’t leave me with much. I struggle, but just glad to still have a job. I just don’t see how the people in the high income bracket are paying the largest share of taxes when so few fit in that bracket.


  11. kosmo
    Apr 16, 2011 @ 18:43:51

    @ MarineMom – It’s because someone with $100 million in income has the same income as 2700+ people making your salary!

    Best of luck with your finances 🙂


  12. Taylor
    Apr 17, 2011 @ 10:19:03

    How I arrived here (at this site) is still a mystery, but it was likely the result of looking for some background on the premise of seizing a percentage of wealthy individual’s assets to solve the current crisis would be (not as an option, just a curiosity). I was immediately astounded at the numbers, and just how we got here. THAT turned out to be far more interesting than the whole redistribution of wealth thing. One can spend an incredible amount of time on that one question – lots of information. All of this is fairly scary when you consider it.

    The conservative side wants to foster growth, because they believe that the engine of the American enterprise is almost unbelievable in what it is capable of doing, especially when given a universally agreed goal – this fact has been demonstrated several times within the last century. Conservatives view the rewards of personal sacrifice and capital gain as property which has been earned – which it clearly is – but is in stark contrast to the view of the opposition. Progressives are 100% correct in the belief that all are to be treated as equals, and that there is an obligation of those fortunate enough to experience significant success (even through great sacrifice) to assist those less fortunate. The progressive side wants to make sure that no one individual or group is disenfranchised from anything, and sees that as one of the primary goals of government. To me, that is one of the fundamental debates between the factions engaged in ruling the world’s nations. It is far more complex, but the whole progressive v. conservative fight boils down to just a few major items, and this has to be one that simply refuses to evaporate.

    The point in coming back here was to discuss the deception that irked me (and several of my acquaintances) this week. That being the White House ‘2010 taxpayer receipt’ – which is available from the official site:
    What it shows is another lame attempt at skewing the SS/Medicare mess, showing U.S. defense as 26% of expenditures, when the combined SS/Medicare juggernaut is more than 3 times the dollar amount… and completely glosses over the FACT that SS and Medicare are matched 100% by employers – so it obfuscates the magnitude of what is really going on. Why do I not hear screaming?

    Massive inflation, the destruction of an economy, and the decline of a nation looms on the horizon. Sorry to be such a downer, it is just what appears to be IMO what is coming. Is there a practical alternative? Does anyone actually believe that it is possible to pay this debt back in 2010 dollars? This is especially hard to believe when there doesn’t appear to be the will to bring us into balance. If the dollar get ‘adjusted’ to enable us to retire this debt at what amounts to partial forgiveness, what impact will that have on the haircut recipients?

    SS is a BIG part of the problem, and Madoff’s ponzi scheme looks pale when compared to Roosevelt’s. It is a safe bet that there are gonna be a lot of bothered boomers…


  13. Pat Roupe
    Apr 17, 2011 @ 10:24:29

    Wonderfully concise and informative. Would love to see you republish with the latest figures. Does anyone realized that, if those 3 million households having an AGI of over $200,000 (disposable income after all their deductions) would pay $1,000 more per year, leaving them $199,999 in disposable income, it could reduce the deficit by $3,000,000,000 each year (and that’s using 2006 statistics); that’s $3 Billion per year.

    I wonder why we are so opposed to that simple solution (one of the many needed), yet we have no issue with saying Medicare/Medicaid/Social Security and other “entitlements” for the middle income & poor are always “on the table”? The amazing part of this is that the congress is able to convince the poor that this is good for them and good for the country.

    Before anyone screams, why not take a moment and realize that the majority of us will never make $200,000 a year, either before or after deductions, and remember that the itemized deductions favor those making the most. Households making $200,000 don’t create jobs or wealth, for the most part, for anyone but themselves. Ask yourself, why do congressmen court the rich? We couldn’t get them on the phone if our lives depended on it; but the actively seek the support and curry the favor of the rich & super rich.

    I know this is a long comment, but I have been looking for this information for quite a while, and now I wonder (or do I?) why it is so hard to find on the internet.


    • Pat Roupe
      Apr 17, 2011 @ 10:30:20

      Sorry about the “math error” – it should have read: “would leave them $199,000…” – more a typing issue than a math issue. Apoligies.


    • Roger
      Jul 16, 2011 @ 11:02:47

      Nice mainstream try.
      But does anyone realize, that if the 47% of households who currently pay 0 taxes were to pay an average of just $250 a year, it would generate $20 billion? And what right do you have to decide how much more to take from someone else, or that whatever you leave him with is fair in your opinion.


  14. Taylor
    Apr 17, 2011 @ 10:32:19

    Oh BTW, why don’t we move Election Day to April 16th (or in this case, April 19th)?

    Why don’t we just put the entire congress in prison, and start over – let’s just not even have an election at all, just a national lottery, with millions of winners, but just 535 losers that are compelled to serve 4 or 5 years in congress, and then receive a lifetime exemption from ever having to participate in the lottery again.

    Sure, you would end of with a certain percentage of thieves and prostitutes, you would undoubtedly get a few doctors, lawyers, and maybe even an Indian Chief, but you would by definition get a representative body that would not be obligated to anyone or anything but their own beliefs. As far as the thieves and prostitutes population goes, I’ll bet it would be lower than what we have in place currently.


  15. Taylor
    Apr 17, 2011 @ 10:41:06

    Mr. Roupe:

    You have a good point…but.

    When you have a trillion+ deficit, your 3 billion (while significant) amounts to less than 0.3% – agreed that it is a start, and you must start somewhere, but you have to get a grip on the scale of the problem. Only then will you realize that fairly austere measures are needed… and we’re still talking balance, not the debt (and the debt load).


  16. kosmo
    Apr 17, 2011 @ 15:49:07

    @ Taylor and Pat – we have political articles on The Soap Boxers every Thursday, alternating conservative and liberal viewpoints. You may want to check back in on Thursdays and read the new articles 🙂 See the About page for the complete schedule.

    @ Pat – I’m a bit annoyed when Social Security is on the table because a well-run SS program, should in theory be budget-neutral (incoming = outgoing). Of course, we don’t have a well-run SS program … the effective yield, for me, will be in the low 2% range, according to the SSA’s site (

    @ Taylor – I’m not sure I’d imprison every current member of congress, but I don’t think your idea is a bad one. I’d personally like to see congress become more like a school board. There’s no pay, and nobody really WANTS the job, but they volunteer because it’s good for the kids.


  17. Roger
    Jul 16, 2011 @ 10:55:31

    The question is, how much MORE taxes on the so-called rich is enough? Those who repeatedly argue that the rich pay less in taxes are either failed middle school math or are just too ideologically intransigent to admit the truth. They pay both a higher percentage of tax, and when applied to a larger number of salary dollar, the totals are dramatically more. To quote Obama, “I’ll repeat that.” — The person who pays 40% tax on $200,000 income will give the goverment $80,000. While the person who earns $40,000 will give the government about $10,000. So when will the rich be taxed enough? Those who say things like “90%” and “take it all” are revealing their true position, which is ideologically contrary, at least in this country – or else they have fallen for the class-envy that Obama has nurtured more than any other President in my lifetime.

    Let’s turn the tables and spotlight on the 47% of households who pay NO federal income tax at all. To an America that calls itself a democracy, a nation of, and by the people – how is this possible? Why don’t these households have a financial stake, and a say, in their government? Of course, some simply escape their responsibility with tax loopholes and such. But I would remind that the uber-radical lefties who clamor for higher taxes are the first ones to demand their accountants shelter their income from taxes. So, if the roughly 47% of households who currently pay NO federal income tax were to pay, let’s say, an average of $250 a year – it would generate more than $20 billion in extra revenue, per year. That money, which is a paltry amount by almost any but the most impoverished standard, is “a privilege” and “the patriotic thing to do” according the VP Biden – and it helps to “spread the wealth around” more fairly, if indeed fairness is what President Obama means when he talks about shared sacrifice.

    As a result, those households might have a stake in the outcome of elections and votes on legislation that affects them. Invested, that money will grow exponentially and contribute significantly to the disastrous debt that Obama has exacerbated in less than 2 years.

    So why isn’t anyone in the country, or in Congress, suggesting that everyone in the nation pay something? You have to wonder.


  18. kosmo
    Jul 16, 2011 @ 12:18:50

    I really need to address that 47% statistic with its own article at some point. First of all, a lot of sites – even mainstream media one – are getting this wrong. It’s not 47% of households, it’s 47% of FILERS. In other words, it includes students with a summer job, a retired person working a few hours as a greeter at Wal-Mart, etc. In other words, people who certainly WILL pay a good share of taxes during their life, or who already have. It may also include a person running a sole proprietorship who lost $1 this year after making $1 million (and paying taxes on it last year). It’s a fascinating thing to look into, although I doubt I’ll find out many details, since they aren’t publicly available.


  19. kosmo
    Aug 08, 2011 @ 14:11:02

    Updated with data from 2009 (most current data available from the IRS).


  20. Taylor
    Aug 08, 2011 @ 22:28:40

    Kosmo: Thanks for updating the data.

    Roger is correct.

    If we take a rough interpolation of the (updated) chart, and estimate the combined AGI for ALL taxpayers earning more than $200K/year, it looks to be somewhere in the neighborhood of $2 Trillion (give or take a few billion – someone please check my math). So assume that all of these folks pay the current top bracket rate of 35%, the contribution of this group amounts to ~700 Billion. If we then follow through on the (Obama) premise that the top tax rate rise to 48%, the additional take would bring that up to ~$1 Trillion. We could also just pretend that the principle of ‘fairness’ were to be taken to an extreme, that the US suddenly became a socialist enterprise, and the government simply took the historical top rate (from 1944/45, which was 94%) from these folks, we see that (just to make the math easier) it could approach $2 Trillion of additional income.

    This is not without precedent, in fact, the top tax rate remained above 90% for more than a decade in post WWII America.

    Still, we must come back to the issue of the scale of the debt. Even if the above (94%) could be done, half of the additional revenue would be used up filling the annual deficit – and at that rate, it would take more than 14 years to retire the debt. All of this assumes that the patient remains in robust health while this nearly audible bleeding is taking place.

    So in the end, this can’t be considered a serious solution, and the argument that it would stall growth can’t be ignored, at least not IMO anyway.

    I grow sick of listening to respected leaders ‘inform’ us that the US citizens are undertaxed relative to their European counterparts (as if the whole of Europe were). Look around. We have a fairly advanced standard of living, a military that is 2nd to none, a health system that draws heads of state, as well as others from around the world seeking treatment, a pretty great transportation system, relatively clean water and air (ever been to China?), and yet somehow this is all paid for at a lower rate than anywhere else… based on what calculus? J.P. Morgan said that compound interest was the 8th wonder of the world, and that is just what is going on. The most painful current reminder of this phenomenon might be gasoline, where in my state almost $0.35/gallon is tax – but whatever the example, we are taxed on income at federal and state (and sometimes, even local) levels, and the goods and services are usually taxed as well in the form of excise or other partially hidden levies, sales taxes, and sometimes both. It compounds to truly scary heights. I challenge all to make an attempt to calculate your true tax rate, and I bet it would simultaneously scare and anger most.

    Has anyone repudiated Hauser’s Law? All of this just screams that revenue is NOT the problem. I’m not even sure it is as much a (lack of ) growth issue – even though there are very good arguments that support that belief, as much as it is a glaring size of government (spending) issue. Sure, the ponzi scheme is out of control, and healthcare, and even military spending are all in need of balance, but the issue is nearing a tipping point… and our leaders can’t even find a dime without looking like clowns. Now we face the repercussions of no longer having our debt rated AAA. It may be “the economy stupid,” but I do believe the 800 lb. elephant is the deficit, and the resulting debt. Do we continue this nonsense, or just mail the keys to China?

    Our leaders should be required to know basic math. I stand down from the soap box.


  21. kosmo
    Aug 08, 2011 @ 23:21:55

    @ Taylor

    I won’t try to respond to your entire comment at once. However, I’ll look at this:

    “So assume that all of these folks pay the current top bracket rate of 35%, the contribution of this group amounts to ~700 Billion. If we then follow through on the (Obama) premise that the top tax rate rise to 48%, the additional take would bring that up to ~$1 Trillion. We could also just pretend that the principle of ‘fairness’ were to be taken to an extreme, that the US suddenly became a socialist enterprise, and the government simply took the historical top rate (from 1944/45, which was 94%) from these folks, we see that (just to make the math easier) it could approach $2 Trillion of additional income.”

    Actually, it wouldn’t approach $2 trillion of additional income from this goup, but $2 trillion of TOTAL income. We’d have to subtract the current $700 billion from that amount, leaving somewhere around $1 trillion of additional revenue.

    Liberal or conservative, I think most people would agree that some level of spending cuts are necessary. The trick is getting opposing viewpoints to agree on what to cut. Cut defense spending or food stamps?


  22. kosmo
    Aug 09, 2011 @ 10:01:04

    @ Taylor – There’s a much better spreadsheet to use to determine each segment’s share of income and taxes (that was slightly outside the scope of this article, which was focused more on the demographics of the 250K+ group.

    For an all-encompassing look at the financial side, you’ll want to look at this:

    The foilks with AGI of $200K+ have a combined AGI of $1.964 trillion and pay taxes of $434 billion trillion (significant chunks of income at this level are likely due to capital gains; also, AGI will be reduced by deductions). That’s 26% of total AGI (7.6T) and 50% of income taxes paid (866B).

    There’s a ton of data available at the IRS web site:,,id=134951,00.html

    You do need to pay attention to what you’re looking at, though, as some spreadsheet are looking at a sub-total of the population (such as returns with itemized deductions).

    I’ll probably break down that spreadsheet into an article when I get the time.


  23. Squeaky
    Aug 11, 2011 @ 11:52:45

    Great article Kosmo, thank you for updating the data.


  24. Norm
    Aug 16, 2011 @ 10:47:03

    Thanks for the article and stats. I’d like to make once clarification.

    Obama’s plan was to let the Bush tax cuts expire, for those making $250,000, which they were already set to do. He had no plan to extend the tax cuts for this group, or to raise taxes beyond their previous amounts.

    If you are going to say it was his plan to raise taxes on those making more then $250,000, then I think it’s also important that you say his plan was to reduce taxes for most people under $250,000, because his plan was to extend the Bush tax cuts for those groups of people.

    So if he is responsible for “raising” taxes for one group, then it was also his responsibility for cutting taxes for a majority of everyone else. People seem to like to fault him for raising taxes on a small group of people while not giving him credit for lowering them for a much larger group of people.

    The reality is, his plan was only to let the tax breaks expire on schedule for a certain, very small group, of tax payers. He had no additional plan to raise taxes then the law that was already in place.


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