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Top income earners paid more income tax in 2013 than in 21 years

On Behalf of | Dec 15, 2015 | Tax Law

Most taxpayers know that income is taxed at different rates, depending on how much the taxpayer has earned in the year. For instance, in 2013 a single taxpayer paid 25 percent on the income he or she earned above about $36,000, and 28 percent on income above about $88,000. The top rate on income earned through work that year was 39.6 percent, which applied to any income after $400,000.

But when it comes to the U.S.’ top earners, these gradations of rates are often not very relevant. That is because much of their income through investments. Things like dividends and capital gains, which are the profits from the sale of property or investments, are taxed at different rates.

As MarketWatch explains, since the 1990s the country’s very wealthiest taxpayers have paid less and less as a percentage of their income. By 2012, the top 400 taxpayers in the U.S. paid just 16.7 percent in income taxes, the lowest rate since 1992.

But the next year, cuts on capital gains taxes implemented in the 2000s expired, raising the top rate on capital gains taxes to 23.8 percent for 2013.

The top 400 in income make up just 0.0001 percent of earners, but paid nearly 2 percent of income tax collected in the U.S. in 2013. It is unlikely that any of our readers are part of this elite club, but some of them may be facing tax problems, such as a delinquent tax bill or an audit. A tax attorney can help people in this situation resolve these issues in 2016.