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The 400 Richest Americans Pay An 18% Tax Rate
By Robert Lenzner | Forbes – 3 hrs ago...
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.http://news.yahoo.com/400-richest-americans-pay-18-tax-rate-121952135.html
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The 400 richest Americans used to pay 30% of their income on the average to Uncle Sam. Today, they pay 18% on the average, according to Steve Rattner, a Wall Street financier, who just presented these figures on Mornings With Joe,MSNBC.

The main reason for the drop in their tax rate of some 40% is the tax cuts by George Bush in 2003, taking the rate paid on dividends and capital gains down to 15%. This reduction in the investment class's taxes powered the bull market in stocks from the fall of 2003 until the fall of 2007.

Shockingly, the plan to raise the debt ceiling collects nothing from the wealthiest Americans to reduce our budget deficit. The Republican right wing holds the Obama White House hostage. It's a sad day for the principle of sharing the pain equitably.



http://blogs.forbes.com/janetnovack/2011/05/11/richest-400-took-record-share-of-capital-gains-during-market-meltdown-year/

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Richest 400 Took Record Share Of Capital Gains During Market Meltdown Year
May. 11 2011 - 1:28 pm | 3,719 views | 0 recommendations | 0 comments
By JANET NOVACK

Still paying less than his secretary. Image via Wikipedia

The 400 highest-income Americans reaped a stunning 13.1% of net capital gains reported to the Internal Revenue Service for 2008, a year which ended with the Dow Jones Industrial Average down 33.8%, the S&P 500 index down 38.5% and the NASDAQ composite off 40.5%.

That’s just one of the fascinating tidbits in the Internal Revenue Service’s latest annual report on the 400 highest income taxpayers, available here. Still, the new report shows the highest income folk, who are heavily dependent on capital gains, felt the market pain too. Overall, the top 400 taxpayers posted an average of $153.7 million in gains each (or a total of $61.5 billion in gains) down from $228.6 million (or a total of $91.4 billion) in 2007. As a result, the average adjusted gross income of the 400 declined nearly 22% to a mere $270.5 million, from a record $344.8 million for 2007. It was still the second highest on record, topping 2006’s average AGI of $263.3 million. The cut-off for making the top 400 in 2008 was AGI of $110 million, down from $139 million in 2007.

As we’ve pointed out before, thanks to the historically low 15% tax rate on long term capital gains, the uberrich pay a lower effective federal income tax rate than ordinary rich folks, who get more of their money from salary and other ordinary income, taxed at a top 35%. (Warren Buffet has famously complained that he pays a lower effective tax rate than his secretary.) In 2008, the top earning 400 paid an effective federal income tax rate of 18.11%, up from a record low 16.62% in 2007, when an even higher share of their total income came from capital gains. By comparsion, as the IRS report here shows, in 2008, taxpayers with an adjusted gross income between $500,000 and $1 million paid an effective tax rate of 23.4%. Even those earning between $200,000 and $500,000 paid a higher effective tax rate —19.6%—than the plutocrats.
The IRS’ list is different from the Forbes 400 Richest Americans list, which is based on estimated net worth, not reported earnings. But there is no doubt considerable overlap and the IRS has acknowledged it picked the 400 number because of the Forbes list.

When the IRS first reported on the top 400 taxpayers in an analysis here published in 2003, it pulled tax returns going all the way back to 1992. The IRS knows (but won’t publicly disclose) exactly which taxpayers have been on the list for each of the 17 years. According to the new numbers from the IRS, four taxpayers have made the list for all 17 years and another 83 have been on it for at least 10 of those years. Since a wealthy taxpayer can decide when to recognize income through capital gains, there would naturally be more year to year variation on the IRS list than on the Forbes list.

The 400 richest also reported a record share of all income from passthroughs—that is Subchapter S corporations and partnerships which pay no income tax but pass through all their income, losses and credits directly to the tax returns of their individual owners. While the income of Subchapter S corporations is often used by politicians as a proxy for “small business”, there is currently no limit on how big a company organized as a Sub S can be—only a limit on how many shareholders it can have. Indeed, there’s been much public speculation about whether Koch Industries, the private company owned by Charles Koch and David Koch, the conservative activist brothers tied for 5th on the Forbes 400 list, is run as a Subchapter S.

(Update: In an emailed statement Wednesday Koch General Counsel Mark Holden said: “Koch Industries does pay corporate income taxes and is compliant with all its tax obligations.”)

According to the IRS’ numbers, in 2008, 202 of the 400 reported $21.6 billion of net S Corp and partnership income, or a record 3.97% of all such income, up from 3.06% in 2007 and 1.47% in 1999. Meanwhile, 184 of the 400 reported Sub S and partnership losses totaling $4.9 billion, or 2.79% of all such losses reported.

Also notable, given the campaign by Bill Gates and Warren Buffet to persuade billionaires to give at least half their net worth to charity: donations by the top 400 taxpayers declined in 2008, along with their incomes. The 400 claimed total charitable deductions of $8.9 billion in 2008, down from $11.1 billion in 2007.

Charitable deductions are used by the rich to reduce their tax burden so it really isn't so charitable.