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Posts Tagged ‘millionaire’

Seal of the United States Internal Revenue Ser...

From the IRS’ Fall 2010 publication, Individual Income Tax Returns, 2008, we see that the “progressive” federal income tax ceased to be so for those who made more than $2 million in 2008.

The effective tax rates for those who made at least $200k were (from page 11):
$200k to $500k – 19.5%
$500k to $1m – 23.9%
$1m to $1.5m – 24.7%
$1.5m to $2m – 24.8%
$2m to $5m – 24.6%
$5m to $10m – 23.8%
>$10m – 20.9%

The 13,000 who made more than $10 million paid a lower effective tax rate in 2008 than the 578,000 who made between $500,000 and $1 million.

The reason for this is made clear in the same chart, showing a steady increase in the proportion of “unearned” income from capital gains and dividends, which were taxed at a top rate of 15%, compared to the top rate of 35% for “earned” income.

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