The IRS yesterday released some new statistics on individual income and taxes for the year 2007. I got an email from the IRS about it, but didn't blog on it, figuring that I'd handle it by reacting to the inevitable New York Times or Wall Street Journal article spinning the news as "Rich Get Richer," and pointing out that the stats also show that those in the upper income percentiles are paying an increased share of taxes. Well, Greg Mankiw beat me to it, citing the Tax Foundation.
What's astonishing is that the New York Times and the Wall Street Journal, both of which used to routinely carry this sort of news, have passed. The Times's longtime tax reporter, David Cay Johnston, retired from the paper in April 2008, and the Journal's man on the tax beat, Tom Herman, retired in April 2009. It may be an improvement that we learn of tax data via the blogs of Professor Mankiw and of the Tax Foundation rather than from the newspapers, but, on the other hand, it's a smaller audience that ends up learning that, as the Tax Foundation put it, in 2007 "the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. ...Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago. To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined."
And to put it in another perspective, that top 1%, which in 2007 paid 40.4% of the income taxes, earned 22.8% of the adjusted gross income. The cut-off to get in to the top 1% in 2007 was $410,096. The top 5%, those earning more than $160,041 a year, earned 37.4% of the adjusted gross income and paid 60.6% of the federal income taxes. The IRS data are downloadable here for those interested in browsing the spreadsheets.
