Top 5 percent in income pay 55 percent of taxes

OVERHAUL

CURT ANDERSON, THE ASSOCIATED PRESS

Originally published Tuesday, April 9, 2002

WASHINGTON -- As a group, Americans whose incomes are in the top 5 percent are footing an increasing share of the national income tax burden. People in the bottom half, on the other hand, are paying only a fraction of the total take.

Two-income households are increasing, which puts more families in the top slice of taxpayers. Millions of small businesses and partnerships are up there, too, paying on graduated personal income tax scales instead of the flat corporate rates. Many other incomes were boosted by the 1990s stock market boom.

President Bush's big tax cut will prevent the wealthy from paying an even greater share in coming years. Some crucial provisions, however, such as the gradual doubling of the child tax credit, will reduce or eliminate income taxes for many middle-income people, while the rich won't qualify.

"This trend is not going to reverse," said Scott Hodge, executive director of the Tax Foundation, a nonpartisan tax education and research group. "This will be the demographic for the 21st-century taxpayer."

The income tax deadline for most of the country is midnight April 15, next Monday.

For 1999, the most recent year for which complete Internal Revenue Service statistics were available, 6.3 million taxpayers whose incomes were in the top 5 percent paid more than 55 percent of all income taxes. They had adjusted gross incomes above $120,846 a year, meaning spouses could earn a bit over $60,000 each and be considered among the nation's richest.

"It's very easy to move into the top echelon of taxpayers," Hodge said.

The wealthiest 1 percent -- those earning $293,415 and up -- paid more than a third of the taxes, while their share of the nation's taxable income was 19 percent. They pay income taxes at the top rate, now 38.6 percent, compared with a maximum rate of 15 percent for most lower-earning taxpayers.

Taxpayers in the bottom half paid only 4 percent of income taxes in 1999, according to the IRS. These 63 million taxpayers earned, on average, less than $26,415 a year.

Going back to 1989, the top 5 percent income group paid about 44 percent of income taxes, the bottom almost 6 percent. Then, the top tax rate paid by high earners was 31 percent.

The Olympian Copyright 2002

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