The IRS has released data on the 400 highest-earning Americans who filed tax returns in 2010, the most recent year available. This is where all of our nation's bad economic trends converge: increasing accumulation of wealth at the very top of the scale (these 400 people represent 1.3% of our country's income), matched by a system of taxation that taxes investment income at a lower rate than regular wages, which means that the richest people in the world—who profit mostly from capital gains, not salaries—end up with lower tax rates than working people. And here are the numbers, via the WSJ:
The IRS's tables show that the top 400 taxpayers had an average tax rate of 18%. But more than half, or 221, had average effective tax rates between 10% and 20%, while 37 had an average rate of less than 10%.
In 2010, the top rate on wages was 35%, while the top rate on long-term capital gains and many dividends was 15%. Those rates, and their deductions, could have helped to lower the average rate paid by the 400, says Mr. Williams.
This is the most powerful argument in the world for taxing capital gains like regular income. And for instituting a maximum income, and forcibly redistributing the assets of the top .01%. At least one of the above, to start.
[Photo of a yacht owned by Larry Ellison, who pays a lower tax rate than you: AP]