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1 David S. Logan, Summary of Latest Federal Individual Income Tax Data 1 (2011)

handle is hein.taxfoundation/ffcifxz0001 and id is 1 raw text is: October 20, 2011 No. 285 Summary of Latest Federal Individual Income Tax Data By David S. Logan The Internal Revenue Service has released new data on individual income taxes, reporting on calendar year 2009. The year saw no economic improvement from 2008 as unemployment continued to increase. The amount of individual income tax paid steeply declined by $166 billion, twice the decline from 2007 to 2008. Nationally, average effective income tax rates were at their lowest levels since the IRS began tracking them in 1986. The average tax rate for returns with a positive liability went from 12.24 percent in 2008 to 11.06 percent in 2009. As the data below show, incomes reported by tax returns at the high end of the income spectrum fell from 2008 to 2009, as did their share of the nation's income and income taxes paid. In 2009, the top 1 percent of tax returns paid 36.7 percent of all federal individual income taxes and earned 16.9 percent of adjusted gross income (AGI), compared to 2008 when those figures were 38.0 percent and 20.0 percent, respectively. Both of those figures-share of income and share of taxes paid-were their lowest since 2003 when the top 1 percent earned 16.7 percent of adjusted gross income and paid 34.3 percent of federal individual income taxes. Each year from 2005 to 2007, the top 1 percent's constantly growing share of income earned and taxes paid set a record. The 2008 reversal of this trend continued in 2009. In fact, the income share for the top 1 percent of tax returns was lower in 2009 than in 2000, largely due to differences in capital gains. Another indicator of this reversal in the income and tax shares of the top 1 percent is that, as in 2008, the top 1 percent no longer pays a larger percentage of total income tax than the bottom 95 percent. This trend was exacerbated by the aforementioned precipitous drop in AGI in 2009. During 2009, the bottom 95 percent (AGI under $154,643) paid 41.3 percent of the total collected, a larger share than the 36.7 percent paid by the top 1 percent (AGI over $343,947). The top-earning 5 percent of taxpayers (AGI equal to or greater than $154,643), however, still paid far more than the bottom 95 percent. The top 5 percent earned 31.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes. Since 2001, the IRS has also been presenting data on a small subset of the top 1 percent, the top 0.1 percent (the top 10 percent of the top 1 percent). In 2009, this top 0.1 percent filed 137,982 tax returns, reporting 7.8 percent of all adjusted gross income earned and paying approximately 17.1 percent of the nation's federal individual income taxes. The average income for a tax return in the top 0.1 percent was $4.4 million in 2009, while the average amount of David S. Logan is an economist at the Tax Foundation.

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