Richest 400 Americans - Tax Rate

The effective federal income tax rate for the 400 taxpayers with the very highest incomes has declined by nearly half over the past two decades, even as their pre-tax incomes have grown five times larger, says a new report from the Center on Budget and Policy Priorities.

The top 400 households paid 16.6 percent of their income in federal individual income taxes in 2007, down from 30 percent in 1995.

To make it into the top 400, a household needed an adjusted gross income of at least $35 million in 1992 (in 2007 dollars) and $139 million in 2007.

The decline in effective tax rates at the very top is due in large part to the capital gains tax cuts enacted in 1997 and 2003. The top marginal tax rate on capital gains is now 15 percent, less than half the top tax rate on wages and salaries. The top 400 taxpayers derived two-thirds of their income from capital gains and qualified dividends in 2007.

Over roughly the same period, the top 400 filers enjoyed huge gains in pre-tax incomes. The average pre-tax income of this group rose by over 400 percent between 1992 and 2007, equivalent to a $275 million increase per person, after adjusting for inflation.

From:
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