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1 William McBride, The Fortunate 400 1 (2012)

handle is hein.taxfoundation/ffdbixz0001 and id is 1 raw text is: June 29, 2012 No. 318 The Fortunate 400 By William McBride Introduction Who are the rich? It depends who you ask and when.1 Since 1992, the IRS has tracked the top 400 earners in terms of adjusted gross income-the so called fortunate 400. Here follows a few highlights from this year's report, which is based on 2009 returns.2 Top Earner Income is Fleeting and Full of Risk Figure 1 shows total adjusted gross income (AGI) for the fortunate 400, in real terms from 1992 to 2009, broken down by major source. Total income has more than doubled, from $29 billion in 1992 to $81 billion in 2009. On a per return basis, income went from $72 million in 1992 to $202 million in 2009. Much of the growth and volatility in real income for top earners has come from capital gains. In the early 1990s, capital gains remained low at about $12 billion (in aggregate), but then climbed to $62 billion in 2000 at the peak of the stock market. They then dropped in half to $31 billion in 2002, peaked again at $96 billion in 2007, and collapsed again to $37 billion in 2009. In every year since 1994, all 400 top earners reported capital gains. The average top earner in 2009 realized $93 million in capital gains, down from $236 million in 2007. In contrast, wages and salaries have remained basically flat, going from $7.5 billion in 1992 to $6.9 billion in 2009. The number of filers reporting wage and salary income declined from 366 in 1992 to 311 in 2009. Per return, wages and salaries have gone nowhere as well, from $20 million in 1992 to $22 million in 2009. The only sustained increase in income has been from pass-through businesses, particularly partnerships and S corporations. This income source quadrupled from $51 billion in 1992 to $198 billion in 2009. Yet the number of filers reporting partnership and S corporation income remained about the same 222 in 1992 and 237 in 2009. This means the average amount reported per return has increased, from $23 million in 1992 to $84 million in 2009. As we have documented before, pass-through businesses have grown 1 By one definition it is millionaires, which Scott Hodge has discussed in, Who are America's Millionaires?, TAX FOUNDATION FISCAL FACT NO. 317 (June 15, 2012), ttp://taxfoundation.org/ardice/who-are-americas-millionaires. 2 Internal Revenue Service, The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992- 2009 (June 2012), ttp://www.irs.gov/pub/irs-soi/09iiitop400pdO.

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