Business

How much income you need to be in the 1%

The fierce public debate over recent legislative proposals to sharply raise taxes on the rich in the U.S. tends to obscure one thing — relatively few Americans would be directly affected by such a hike in the so-called marginal rate on top earners.

A plan by freshman New York Congresswoman Alexandria Ocasio-Cortez to tax incomes above $10 million at a rate of 70 percent would impact the top 0.1 percent of income earners. That amounts to 140,000 tax filers, with an average annual adjusted gross income — the metric that’s used to determine your taxable income — of $7.3 million. By contrast, the bottom 50 percent of earners comprises 70 million taxpayers.

Sen. Elizabeth Warren is proposing a “wealth tax” on Americans with more than $50 million. According to the Massachusetts Democrat, that would raise $2.7 trillion over a decade by levying a 2 percent tax on individuals with more than $50 million in assets and 3 percent on those with more than $1 billion. There are fewer than 600 billionaires in the U.S., according to UBS. Two leading scholars on inequality estimate that Warren’s proposal would affect 75,000 American households.

Are you in the top 1 percent?

The income threshold to enter the top 1 percent of U.S. earners: $421,926. 

That’s according to an analysis from the Economic Policy Center, which analyzed tax data on income. But many of these earners won’t pay the highest tax rate under the 2017 Tax Cuts and Jobs Act because the top marginal rate for married couples — 37 percent — only kicks in on every dollar of income above $612,350.

Historian says billionaires should stop talking philanthropy, start talking taxes

Some U.S. states with a concentration of high-earning households have a higher bar for entering the top 1 percent of earners, EPI found. Connecticut has the highest threshold, with people needing to earn at least $700,800 to enter the top 1 percent. That’s followed by New Jersey, at $588,575, and Massachusetts, at $582,774. 

The state where it’s the easiest to slip into the ranks of the top 1 percent is Mississippi, where the threshold stands at $254,362. 

Are you in the top 0.01 percent? 

The income threshold for this group, and the Americans that would most likely feel Ocasio-Cortez’s tax hike, is $9.8 million, according to EPI. Their average income — $32.3 million per taxpayer.

Although that falls far below Sen. Warren’s prescription for righting the tax system, it’s still far greater wealth than the typical taxpayer can fathom. Across all 141 million taxpayers, the average adjusted gross income is less than $72,000, according to a recent IRS report. 


Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close