Life At The Very Very Top
March 1, 2010
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Ever wonder what life is like at the top? Well, thanks to Visualizing Economics, here is a look at the average income reported to the IRS and the average taxes paid by the 400 individuals with the highest adjusted gross incomes (based on their tax returns) over the period 1992-2005.
To make it into the top 400 in 2005, you had to report income of at least $100.3 million. The average reported income for the group was $213.9 million.
A Wall Street Journal article discussing these figures adds the following context:
“Those numbers are really stunning,” says Michael Graetz, a professor of law at Yale Law School and a Treasury Department official under President George H. W. Bush. “One hundred million dollars is an enormous estate to be accumulated over a lifetime, and not what we think of as one year’s income for anybody.”
The new data actually understate the group of 400’s remarkable performance. The income yardstick used by the IRS for its study is known as “adjusted gross income,” and it doesn’t include tax-exempt interest income from state and local government bonds. (An IRS spokesman says nearly 4.5 million investors reported tax-exempt interest income for 2005 totaling $57.7 billion.) Moreover, adjusted gross income, or AGI, is arrived at after deducting various items, such as moving expenses, alimony payments and the self-employed health-insurance deduction. (For those who file Form 1040 for 2007, it’s the amount shown on line 37.)
For its analysis, the IRS relied only on what taxpayers actually reported, without making any independent effort to estimate unreported income. The report doesn’t identify anyone by name because of taxpayer-privacy laws. It’s also important to remember these figures don’t represent wealth or even lifetime earnings — merely income for a single year.
It is hard to get good numbers on the super rich. They are more than happy to fund studies on the poor–but for obvious reasons don’t like to have their own lives examined.