NCPA - National Center for Policy Analysis

Top Earners Earn, Pay More

December 5, 2000

The top 1 percent of American income earners (those with adjusted gross incomes over $269,496) earned 18.5 percent of the nation's adjusted gross income and paid 34.8 percent of all federal individual income taxes in 1998, according to preliminary data released by the Internal Revenue Service. The bottom 50 percent of earners (those with adjusted gross incomes below $25,491) earned 13.7 percent of all income and paid 4.4 percent of all income taxes.

  • The top 5 percent of earners (those with adjusted gross incomes over $114,729) earned 32.9 percent of income and paid 53.8 percent of income taxes.
  • The top 10 percent (those with adjusted gross incomes over $83,220) earned 43.8 percent of income and paid 65 percent of income taxes.
  • The top 25 percent (those with adjusted gross incomes over $50,607) earned 65.6 percent of income and paid 82.7 percent of income taxes.
  • A year earlier, the top 1 percent earned 17.4 percent of income and paid 33.3 percent of income taxes.

The top income earners pay a significantly greater portion of federal individual income taxes than they did a decade earlier. Further, the top 5 percent paid a larger fraction of the tax burden in 1998 than the top 10 percent paid in 1985. Two factors have caused this shift: the tax code's progressivity and rapid income gains at the upper end of the spectrum.

Source: Patrick Fleenor, "Distribution of the Federal Individual Income Tax," Special Report No. 101, November 2000, Tax Foundation, 1250 H Street, N.W., Washington, D.C. 20005, (202) 783-2760.

For more on the Tax Foundation:

http://www.taxfoundation.org

 

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