New York: One definition of rich is getting into the top 1 per cent. If that’s your goal, it’s becoming harder to reach.
The income needed to exit the bottom 99 per cent of US taxpayers hit $515,371 in 2017, according to Internal Revenue Service data released this week. That’s up 7.2 per cent from a year earlier, even after adjusting for inflation.
Since 2011, when Occupy Wall Street protesters rallied under the slogan “We are the 99 per cent,” the income threshold for the top 1 per cent is up an inflation-adjusted 33 per cent. That outpaces all other groups except for those that are even wealthier.
To join the top 0.1 per cent, you would have needed to earn $2.4 million in 2017, an increase of 38 per cent since 2011. The top 0.01 per cent threshold has jumped 46 per cent.
Meanwhile, the top 0.001 per cent — an elite group of 1,433 taxpayers — earned at least $63.4 million each in 2017, up 51 per cent since the Occupy protests.
The median taxpayer, at the 50th percentile, has seen income rise 20 per cent since 2011.
Though the rich in the US are doing well, they also pay the greatest share of taxes. The top 1 per cent earned 21 per cent of the country’s income, and paid 38.5 per cent of federal individual income taxes. The top 1 per cent paid a greater share of income tax to the US Treasury than the bottom 90 per cent combined (29.9 per cent).
Working-class taxpayers do pay many other taxes, including federal payroll taxes for Social Security and Medicare, and state and local levies. However, the bottom half of the income distribution pays very little toward the federal income tax.
The top 50 per cent — taxpayers with an adjusted gross income of $41,740 or more — paid 97 per cent of taxes, and earned 89 per cent of income reported to the IRS.
The income tax brings in about half of all federal revenues, according to the Congressional Budget Office.
Overall, the IRS data show the US collected $1.6 trillion in income taxes from 143.3 million taxpayers reporting a total of $10.9 trillion in adjusted gross income in 2017, the most recent year available.
The IRS data don’t reflect the effects of the tax overhaul signed by President Donald Trump at the end of 2017. The law lowered individual income tax rates while eliminating many deductions and slashing the rate on US corporations to 21 per cent from 35 per cent.
IRS data through 2017 largely show that average tax rates paid have increased in recent years.