Report: In 12 Years, Income for Richest 400 Americans Quadruples, Tax Rate Nearly Halved
New data released by the IRS reveals that, over a period of 12 years, tax rates for the richest 400 Americans were effectively cut in half. In 1995, the richest 400 Americans paid, on average, 29.93% of their income in federal taxes. In 2007, the last year for which the IRS has released data, the richest 400 Americans paid just 16.63%.
In 1995, just 12 of the 400 richest Americans paid an effective tax rat of between zero and 15%. By 2007, that number skyrocketed to over 150. The massive reduction is due to both Bush-era tax reductions for the wealthy and the aggressive exploitation of tax dodges and shelters. (For details, check out this report from BusinessWeek.)
As their tax rates plummeted, the total income of the richest 400 Americans skyrocketed. In 1995, the combined income of the richest 400 was just over $6 billion. By 2007, the combined income of the richest 400 was almost $23 billion.
If the richest 400 Americans simply paid the same effective rate in 1995 as they did in 2007, the government would have collected over $3 billion in additional revenue. Some millionaires agree that the reduction has been unfair and have formed a group, Patriotic Millionaires for Fiscal Strength, to demand higher taxes.