Who Are America's Millionaires?
July 6, 2012
There is a serious ongoing political debate over the tax rates paid by millionaires. Some say the tax rates paid by wealthy Americans are not progressive enough, while others argue that the top rate should be lowered while overhauling the tax code. Neither side of this debate, however, has made any attempt to provide a basic profile of who these taxpayers are, says Scott A. Hodge, president of the Tax Foundation.
In response to this dearth of investigation, the Tax Foundation has used past tax returns to create a profile of America's millionaires: marital status, education, forms of income and other factors.
- While just 40 percent of the 140 million tax returns filed in 2009 represented married couples, the vast majority of millionaire tax returns (86 percent) were filed by married couples.
- Given that income tends to rise with age, it is not surprising that in 2009, 80 percent of millionaires were older than age 45, and 46 percent of all millionaires were older than age 55.
- High-income earners are typically well-educated: among those making $200,000 or more in 2010, 78 percent had a bachelor's degree or more while only 9 percent had a high school degree or less.
Among the most interesting findings, however, are first, that millionaire status is fleeting, and second, that millionaires pay far more than a proportional share of the nation's taxes.
- During the nine-year period between 1997 and 2007, about 675,000 taxpayers earned over a $1 million for at least one year.
- Of these taxpayers, 50 percent (about 338,000 taxpayers) were millionaires for only one year, while another 15 percent were millionaires for only two years.
- By contrast, just 6 percent (38,000 taxpayers) remained a millionaire in all nine years.
As a group, millionaires have seen a considerable amount of volatility in their incomes over the past decade but have consistently borne a substantial share of the overall income tax burden relative to their incomes.
- Millionaires' share of total adjusted gross income (AGI) in 2001 was approximately 9 percent of total AGI, which grew to 16 percent in 2007 and fell to 10 percent by 2010.
- During that same period, the share of income taxes paid by millionaires was roughly twice their share of total AGI.
Source: Scott Hodge, "Who Are America's Millionaires?" Tax Foundation, June 15, 2012.
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