There are fewer millionaires in America today – can you hear the celebration at the Blue Heron farm on Martha’s Vineyard where the Obama family is spending someone’s millions?
For the past three decades, the political left has obsessed about income inequality. As the economy experienced one of the largest and lengthiest economic booms in history from 1982-2007, the left moaned that the gains went to yacht club members.
Well, if equality of income is the priority, liberals should be thrilled with the last four years.
In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.
Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009…
The millionaires who are left still pay a mountain of tax. Those who make $1 million accounted for about 0.2% of all tax returns but paid 20.4% of income taxes in 2009. Those with adjusted gross income above $200,000 a year were just under 3% of tax filers but paid 50.1% of the $866 billion in total personal income taxes. This means the top 3% paid more than the bottom 97%. Yet the 3% are the people that President Obama claims don’t pay their fair share. Before the recession, the $200,000 income group paid 54.5% of the income tax.
What does it take to make believers of tax and spenders? We raise tax brackets on those who produce and hire and, it’s simple, they will hire less, and what they produce will cost more, which affects the sale of what they produce. Here’s a example:
In 2008, Maryland added four new income tax brackets, including a top rate of 6.25% on income over $1 million. (This is in addition to county income taxes, which average 2.98%.)
As we and others have noted before, the Comptroller of Maryland has reported that the number of “millionaire” returns tumbled sharply between 2007 and 2008, a 30% drop in filers and 22% drop in declared income. Rather than income taxes from this group rising by $106 million, they fell by $257 million.
The recession is certainly a contributor: everyone is earning less. But the Comptroller did an interesting additional analysis: how many people filed as millionaires before the tax increase, then did not file at all the following year? The Wall Street Journal explains the findings:
One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008. Some died, but the others presumably changed their state of residence. (Hint to the class warfare crowd: A lot of rich people have two homes.)…
Thanks in part to its soak-the-rich theology, Maryland still has a $2 billion deficit and Montgomery County is $760 million in the red.
In the meantime, the personal wealth of Congress grows significantly. (Take a look at the photo above. Does it get any sillier than that?)