Why It's Not The "Super-Rich" That Will Pay For The Left's "Radical" Tax Plans
- In 2016, the IRS received 16,087 returns that reported $10 million or more in adjusted gross income. That amounts to 0.01% of all returns filed.
- This group paid just over $116 billion in Federal taxes, or 7.9% of total individual tax collections for the 2016 tax year.
- Also worth noting: households making $100,000 - $1,000,000 in adjusted gross income are responsible for 53% of all Federal individual income tax receipts.
Those making below $50,000/year comprise only 3.9% of the same aggregate total. That’s not to say those households do not pay taxes, because we’re only talking about Federal income tax – not sales taxes, real estate taxes, etc.
- You can see the data here under “Tax Generated”: https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-tax-rate-and-income-percentile
The upshot on this point: those 16,000 households currently in policymakers’ crosshairs are going to be a very difficult target to hit. First, they have access to world-class financial planning that will develop tax-reduction strategies to fit whatever changes to the tax code that may come along. Second, there aren’t very many of them, so losing just 20-30% of them will dramatically impact tax collection. For example: to the degree that some are foreign nationals, they can move to new jurisdictions with more favorable tax regimes.
The real issue:
...once taxing the +$10 million earners at higher rates fails (a rational expectation given the prior points), the burden for any incremental social spending will quickly move down the income ladder to the $100,000 - $1,000,000 brackets.
That, the data clearly shows, is where income tax collection is most effective. This group is large (+25 million households) but does not have the same access to tax-minimization strategies as the +$10 million cohort.
They, not the “super rich”, will end up with higher actual taxes.