I was not going to tackle the issue of the new tax law changes at this time. However, Ben A. wrote an excellent response to my “Henry” blog last week. Ben pointed out accurately that the top 10% of the income earners in the United States pays over 70% of the tax on personal income. After reading this, I went back and looked at the data that I had gathered from the IRS. From this I estimate that in 2009 42% of the total federal income taxes in America will be paid by the top 1% of the income earners even though this group generated less than 25% of the total personal income. About 62% of the total tax bill will be paid by the top 5% of income earners. This 5% group accounted for only about 38% of the total personal income.
Ben’s figures and my own are also in sync in terms of those in the bottom 50% of income earners in America. My estimate for 2009 is that the top 50% pays 98% of the federal income taxes. In other words, about one-half of the folks in America pay very little or no tax whatsoever.
Now politicians are telling us that the so-called “wealthy” should pay more income tax. The problem is that it is not necessarily the wealthy who will have to digest this additional burden. It is much more about high income producers than about people who are wealthy. In fact, I just crunched the numbers about those occupations which will be given the priviledge of paying for what is being positioned in marketing jargon as a “tax on the wealthy.” Listed below in rank order are the top 15 occupations [in total number not in concentration] that will contribute an enormous amount of this new tax. These are the top 15 out of more than 500 occupations. Those in the upper income strata [$200K/$250K and more] in each of these 15 account for only about 1.3% of all income producers but will account for 40.5% of all those who will be burdened by the “tax on the wealthy.” Even before this new tax burden, this group was paying about 50% of all the federal taxes on personal income.
Top 15 Occupations Contributing to the Tax on the Wealthy
1. Senior Corporate Executives/Officers
2. Physicians and Surgeons
4. Senior Sales/Marketing Executives and Managers
5. Managers of Retail Stores
6. Management Consultants
8. Operations Managers
9. Investment Managers
10. Sales Professionals: Industrial Products/Services
11. Investment Consultants
12. Managers of Industrial Sales Professionals
13. Real Estate Brokers
15. Professors – tied with Personal Financial Advisors
Copyrighted by Wealthworks, Inc., 2010.