The adjusted gross income of the wealthiest 400 taxpayers jumped 277 percent in real terms between 1992 and 2008, nearly four times the increase for everyone else. Over that same period, the effective tax rate on the richest 400 taxpayers (note: not necessarily the same people year-to-year) fell from 30 percent in 1995 to the 18 percent rate in 2008. Bob Williams of the Tax Policy Center graphs and writes:
Check out the sharp drop in their effective tax rate over the past 15 years--down from 30 percent in 1995 to the 18 percent rate in 2008. Compare that with the 24 percent rate paid in 2008 by people with income between $500,000 and $1 million. The rest of us also saw our tax rate drop from a peak of 15.4 percent to 12.4 percent in 2008. But that doesn't take into account that AGI of the top 400 jumped 277 percent in real terms between 1992 and 2008, compared to a 77 percent increase for everyone else. Adding insult to injury, with so little earnings and so much investment income, the very rich pay a relative pittance in payroll taxes compared to the rest of us.
Read the full story at TaxVox.