<p>The updated IRS figures on income and tax returns for 1985 through 2003 have been released. Here’s some selected info:</p>
<p>The top 1% of personal returns filed in 2003 had an average annual income of $820K - and a minimum of $295K. The average percentage of that income paid to the federal government in income and social security taxes combined was about 26%</p>
<p>The next 4% had incomes between $130K and $295K, averaging $176K. Average combined income & SS tax ~ 27%</p>
<p>From 90th% to 95th%, $95K to $130K, average $109K, average combined federal taxes ~ 28%</p>
<p>For a historical perspective, in the 18 years between 1985 and 2003, the share of national taxable income received by the top 1% increased from 10% to 17%. The share received by the bottom 50% decreased from 17% to 14%. In inflation-adjusted dollars, the income floor of the top 1% has increased by 60%. The income ceiling of the bottom 50% has increased by less than 2% after adjustment for inflation.</p>
<p>So the average 1%er pays more in taxes than the average top 4%er makes. I just think that’s enough tax for a person to pay. We can argue how fair it is for them to make that much but most are probably successful small business owners and insanely hardworking professionals and upper level mgt types.</p>
<p>Well, Barrons, I guess it’s a question of what you get for what you pay, eh? One way to “hide the pea” is to shuffle different services in and out from under the tax umbrella. For example, if sewage treatment is included in your property tax, your tax should be higher than if it’s an extra “service fee” - your net expense is the same. I think most people are extremely unaware of what services are being performed on their behalf with their tax dollars, which makes it pretty hard to say how much is “enough”. The huge increase in tuition at state universities over the 18 year period covered by the IRS report is one (forum appropriate) example of how a large proportion of a particular type of service has been moved “off budget” from taxpayer support to a “user fee.” My state income taxes may have gone down, but I’m spending more (after tuition) than I would have paid if taxes hadn’t been cut and tuition hiked. (More, actually - I’ve got 3 kids.)</p>
<p>Personally, I think a person should be able to scrape by on $50,000 a month after taxes - but hey, that’s just me!</p>
<p>Yes it all comes down to our own values on this. I have always tried to keep my hand and opinion out of the pockets of others so I have no real opinion on how much income one needs. I don’t need $800,000 a year and frankly don’t want to work that hard. We have many people in our firm that do make that kind of money but they also typicaly work a lot more than I do and are in a more cutthroat part of the business I want no part of.
While the Feds have forced some costs down on the state and local levels IMHO this is more common at the state/local levels. But your point is well taken. At least college tuition results in some direct benefit to the student.</p>
<p>kluge, are these agi numbers or taxable income numbers or something else?</p>
<p>Second question or comment, I wish there was a way to do a secret poll of parents as to which category we fell in, and we could see %'s (NOT names)at each income level. I think it might be enlightening or at least interesting. Can that be done here? (On some sites I frequent, it can.)</p>
<p>Mr. B: Doesn’t say. On a categorical basis you can get some information from other sources, though. I think it’s fair to assume that the lower 50% gets relatively little of their income from inherited investment earnings. :)</p>
<p>'mudge - It’s AGI. Which, of course, leaves out untaxed income. There are other statistical weaknesses as well: it’s based on total returns filed, for example, which includes a lot of people (like my kids) who aren’t exactly in the mainstream of what we consider “taxpayers”. Most studies put average family income at around $50,000, not the $29,000 at the 50th% of this report. The numbers are pretty raw. But the overall picture (and historical trends) seems to be pretty solid.</p>
<p>Another q and another comment , what does “personal return” mean? My W and I file a personal return, or I file a personal return? </p>
<p>As an aside, because I find it interesting as I have looked at the last ten year’s returns recently, I have been in every single group listed at least once in the last ten years of tax filings. FA should be a riot,huh? ;)</p>
<p>“Individual Income Tax returns with Positive Adjusted Gross Income” I think if you file a joint return, it counts as one return. Not sure, though.</p>
<p>curmudgeon - this site has run “polls” from time to time, if I remember correctly; such as on “how good is your GC?” So I guess they could run a poll on income/demographics if they wanted.</p>