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Top 400 starts at AGI of $110.6 million in 2006

January 29, 2009

The IRS released a batch of statistics on the 400 1040s with the highest adjusted gross income (AGI) in 2006.

It's an exclusive club. In 2006 the bouncer kept out anyone with AGI under $110,602,000. These 400 taxpayers had 1.31% of the AGI reported on the 138.4 million 1040s filed. They also paid 1.77% of the taxes.

These average 2006 AGI for the flush 400 is $263.3 million. The biggest chuck of the average AGI is net capital gain averaging $165.2 million. This implies that many of these folks only get there once, when they sell their businesses, though some happy hedge fund managers surely made the cut, too.

The next largest component is average partnership and S corporation income of $66.3 million; these 400 returns had 2.87% of all K-1 income in 2006. These are taxpayers who are personally paying the taxes on their business operations; an increase in the top individual rate would be a direct increase on the business tax rate, affecting a significant chunk of the productive economy.

They also averaged $24.6 million in charitable contributions, or 9.3% of their AGI. For reference, President Obama gave 6.1% to charity of his $983,826 2006 AGI, while Vice-President Biden donated 0.15% of his AGI - $380 out of $248,459.

Update: We address Erich's concerns here.

Tags: statistics of income.top 400.

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Comments

Alas, you may have missed the most salient point! The average tax rate of 17.17% in 2006, down from 26.38% in 1992.

I pray these people get the tax relief we know they deserve! Lest we return to the turmoil of 1999, when the average tax rate was 22.23%! Heavens, no!

Posted by: Erich Riesenberg | January 30, 2009 5:43 AM

My apologies. Obviously, the 1.77% stat you cited appears next to the fact that this represents 17.17% of AGI, so you did not miss it, you ignored it.

Carry on, top 400 taxpayer advocate!

Posted by: Erich Riesenberg | January 30, 2009 6:01 AM

It is important that we decide whether the purpose of tax rates is to impose some agreed upon level of fairness, or whether the purpose is to raise revenue to pay for agreed upon government functions. I believe in the latter. It is unsurprising that as tax rates are reduced, people recognize more income that is taxed. After all, income happens because of personal effort and planning. By the way, the amount of tax revenue received from the highest income earners increased over the period in the table.

Posted by: Caleb Standafer | January 30, 2009 10:52 AM

Another salient point: A half-century ago, in 1955, the 400 highest-income taxpayers paid federal income taxes at an average 51.2 percent rate, nearly triple the 2006 top 400 tax rate.

That 1955 top 400 averaged, in inflation-adjusted dollars, just $11,958,028 in income, a tiny fraction of the take-home for the top 400 in 2006.

Posted by: Sam Pizzigati | January 31, 2009 9:36 AM

Sam,

Do you mean to tell me that the less you tax people the more wealth they produce?

Don't you understand that it's not fair that these people got so over paid for working hard, employing thousands, and creatiing new products and services that made other's lives better.

I'm going to have to go back to reeducation and BHO's Ministry of Love.

Chad.

Posted by: Chad | February 2, 2009 2:03 PM