Income Distribution in America

Everything you Ever Wanted to Know About Incomes and Taxation

in America
Ne w Th in k Ta n k .c om

Sources for this Presentation

The IRS
Individual / Corporate Taxes and Income
www.irs.gov/taxstats
Data on the Top 400 Billionaires
www.irs.gov/pub/irs-soi/08intop400.pdf

Income Changes from 1947 - 2007

$200,000
$171,429
$142,857
$114,286
$85,714
$57,143
$28,571
$0
1947

1950

1960

1970

1980

1990

1995

2000

2007

Income Distribution 1947 vs. 2007

Income Distribution 1947

Income Distribution 2007

6%

8%
12%
39%

11%

43%

16%

17%

24%

24%

Bottom 25%
25-50%
50-75%
75-100%
Top 5%

How Much Money do US Citizens

Make
Average Income of Bottom 20%

Average Income of Next 20-40%

Average Income of Next 40-60%

13,000

29,000

48,000

9,750

21,750

36,000

6,500

14,500

24,000

3,250

7,250

12,000

1989 1992 1995 1998 2001 2004 2007

1989 1992 1995 1998 2001 2004 2007

1989 1992 1995 1998 2001 2004 2007

How Much Money do US Citizens

Make
Average Income of Next 60-80%

Average Income of Top 10%

Average Income of Next 80-90%

80,000

400,000

120,000

60,000

300,000

90,000

40,000

200,000

60,000

20,000

100,000

30,000

1989

1995

2001

2007

1989

1995

2001

2007

1989

1995

2001

2007

How Much Money do US Citizens

Make
Average Income of Top 1%

Average Income of Top 400

$1,700,000

$30,000,000

$1,416,667

$25,000,000

$1,133,333

$20,000,000

$850,000

$15,000,000

$566,667

$10,000,000

$283,333

$5,000,000

$0

$0

1989

1992

1995

1998

2001

2004

2007

1989

1992

1995

1998

2001

2004

2007

Income of All US Corporations

Combined
Income of All US Corporations Combined
$1,300,000,000,000
$1,114,285,714,286
$928,571,428,571
$742,857,142,857
$557,142,857,143
$371,428,571,429
$185,714,285,714
$0
1992

1995

1998

2001

2004

2007

Breakdown of Incomes
Year

B 20%

20 40% 40 60% 60 80% 80 90% Top 10%

Top 1%

Top 400

1989

$9,600

$23,600

$41,700

$65,800

$98,400 $273,600 $1,030,500 $3.629B

1992

$9,500

$23,000

$39,300

$62,600

$92,900 $217,000 $908,500 $4.189B

1995

$9,000

$23,700

$40,700

$62,600

$94,100 $237,000 $805,392

1998

$10,100

$25,700

$43,300

$69,100

$101,300 $279,500 $1,038,400 $6.170B

2001

$11,700

$28,200

$47,100

$76,200

$114,700 $354,100 $1,474,000 $6.788B

2004

$11,900

$28,600

$47,700

$76,000

$117,000 $331,900 $1,225,190 $8.687B

2007

$12,300

$28,300

$47,300

$76,600

$116,000 $397,700 $1,670,130 $8.262B

$5.415B

Total Income from all Corporations

1992 : $377.899 Billion
1995 : $564.733 Billion
1998 : $662.258 Billion
2001 : $634.366 Billion
2004 : $857.391 Billion
2007 : $1.248 Trillion

How Many Times Have Incomes

Doubled (1980-2008)
Top 1% : 12.21
Top 5% : 8.56
5-10% : 5.13
10-25% : 4.56
25-50% : 4.01
Bottom 50% : 3.73

Income Distribution (1980-2007)

Income Distribution (1989 - 2007)

Income Distribution Billions 1980 - 2007)

700000

9000

600000

7500

500000

6000

400000
4500
300000
3000

200000

1500

100000
0
1989

1992

1995

1998

2001

2004

2007

0
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Income Distribution 1980 vs. 2008

Income Distribution 1980

18%

Income Distribution 2008

13%

21%

35%
20%
11%
26%
25%

22%

11%

What Percentage of Top 5% of Income

Goes to the Top 1%
Percentage of Income Received by the Top 1% in Comparison to the Total Top 5% (1989 - 2008)
70.00%

62.50%

55.00%

47.50%

40.00%
1989

1992

1995

1998

2001

2004

2007

Corporate Income Changes (Before

Deductions) 1980 2008
$2,000,000,000,000
$1,750,000,000,000
$1,500,000,000,000
$1,250,000,000,000
$1,000,000,000,000
$750,000,000,000
$500,000,000,000
$250,000,000,000
$0
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Corporate Income Changes (After

Deductions) 1980 2008
$400,000,000,000
$350,000,000,000
$300,000,000,000
$250,000,000,000
$200,000,000,000
$150,000,000,000
$100,000,000,000
$50,000,000,000
$0
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Percentage of Corporate Income that is

Taxed After Deductions
30%

23%

15%

Corporations spend
income & pay taxes on
whats left

Regular people pay taxes

on income & live off of
what is left

8%

0%
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

What Do People Spend Money On?

What Do People Spend Money On?

What Do People Spend Money On?

What Do People Spend Money On?

Taxation in the US
Tax Rate

Married Filing Jointly

Single Filers

10%

Not over $16,750

Not over $8,375

15%

$16,751 - $68,000

$8,376 - $34,000

25%

$68,001 - $137,300

$34,001 - $82,400

28%

$137,301 - $209,250

$82,401 - $171,850

33%

$209,251 - $373,650

$171,851 - $373,650

35%

Over $373,651

Over $373,651

What Tax Rates do People Pay?

0.140

0.400

0.270

0.130

0.300

0.203

0.120

0.200

0.135

0.110

0.100

0.068

0.100
2001 2002 2003 2004 2005 2006 2007 2008
Federal Taxation on the Top .1% (.35)

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Top 1% (.35)

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Top 5% (.35)

What Tax Rates do People Pay?

0.180

0.160

0.130

0.135

0.120

0.098

0.090

0.080

0.065

0.045

0.040

0.033

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Top 5 - 10% (.30)

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Top 10 - 25% (.30)

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Top 25 - 50% (.25)

What Tax Rates do People Pay?

0.070

0.300

0.22

0.053

0.225

0.17

0.035

0.150

0.11

0.018

0.075

0.06

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on the Bottom 50% (12.5)

0
1980 1984 1988 1992 1996 2000 2004 2008
Federal Taxation on All Corporations (.35)

0
1992

1995

1998

2001

2004

2007

Tax Rate of the Wealthiest 400

How Much Tax Revenue was Lost in

2008?
Amount Not Paid by Top 50% : $1.201 Trillion
Amount Not Paid by Bottom 50% : $106.375 Billion
Corporations Taxable Income: $978,152,640,000
Corporations Taxes at 35%: $342,353,424,000
Corporate Taxes paid: $228,522,752,000
Amount Not Paid by Corporations: $113.83 Billion

State Average Tax

Highest

Lowest

Hawaii: $1,832

Alaska: $0

Washington: $1,571

Delaware: $0

Nevada: $1,268

Montana: $0

Wyoming: $1,213

New Hampshire: $0

Tennessee: $1,068

Oregon: $0

State Tax Rates

Highest

Lowest

California: 8.25%

Alaska: 0%

Indiana: 7%

Delaware: 0%

Mississippi: 7.0%

Montana: 0%

New Jersey: 7.0%

New Hampshire: 0%

Rhode Island: 7.0%

Oregon: 0%

State Local Tax Rates

Highest
Louisiana: 4.69%
New York: 4.52%
Colorado: 4.08%
Alabama: 4.03%
Oklahoma: 3.83%

Connecticut, Delaware,
Indiana, Kentucky,
Maine, Maryland,
Massachusetts,
Michigan, Mississippi,
Montana, New
Hampshire, New
Jersey, Oregon,
Vermont, Virginia, West
Virginia

Gas State Tax

Highest

Lowest

California: .47

Alaska: .08

New York: .45

Georgia: .12

Hawaii: .44

Wyoming: .14

Connecticut: .42

New Jersey: .15

Illinois: .39

Missouri: .17

Corporate State Tax

Highest

Lowest

Iowa: 12.0%

Nevada: 0%

Pennsylvania: 9.99%

South Dakota: 0%

Minnesota: 9.8%

Texas: 0%

Alaska: 9.4%

Washington: 0%

New Jersey: 9.36%

Wyoming: 0%

Estate Taxes in US
Estate taxes are levied to avoid the creation of an elite group
99.7% of estates owe no estate taxes at all - Brookings Tax Policy
Center
1.3% of the small number above are small business or farm estates
(.003%)
These large estates are comprised to a large degree with unrealized
capital gains that have never been taxed

Estate Taxes in US
The increase in the value of an asset is never subject to income tax
if the asset is held until a person dies (Double Taxation Argument)
2001 Estate Tax: Up to $675,000 Exempt / 55% Tax Rate
2002 - 2010: Estate Tax fell from 55% t0 45% (0% in 2010)
Estimated loss of $700 Billion to over a Trillion
2011 Estate Tax: Up to $5,000,000 Exempt / 35% Tax Rate

The Elite 403 Billionaires

Forbes 400: $1,707,250,000,000 estimated total Net Worth

Total income of the 400 (2008): $109,736,000,000
Avg income of the 400 (2008): $274,340,000

Percentage of Income Taxed for the Top

403
0.720

0.700

0.680

0.660

0.640
1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Where Does the Top 403 Income Come

From?
1992

2008
Wages 35%
Interest 35%
Dividends 15%
Cap Gains 15%

13%
8%

36%
47%

11%
68%
8%

9%

Cap Gain Rates

1942: 25%
1978: 28%
1981: 20%
2003: 15%

Lost Tax Revenue Because of 2003

Lowering of Taxes
2003

Lost Revenue
$65,558,000

2004

2005

2006

2007

2008
$0

$2,857,143

$5,714,286

$8,571,429

$11,428,571

$14,285,714

$17,142,857

$20,000,000

Top 403 Incomes vs. Bottom 80%

1992: Average Income of Households 80% - $33,600

1992: Average Income of 400 - $61,052,500 (1,817 Times)
2008: Average Income of Households 80% - $41,125
2008: Average Income of 400 - $274,340,000 (6,670 Times)

How Much Does Social Security Pay to

Retirees
$1,077.20 Avg. Income on SS ($6.73 / hr)
- $115.40 Medicare costs / month
- $208.00 Least Expensive Medicare Supplement I found costs /
month
- $40.00 Medicare part D costs / month
- $208.00 Avg. Monthly Food Cost
- $625.00 Avg. Monthly Housing Cost