Tax Rates On Flush 400 Down

In 1992, the 400 highest income earners in the United States earned 0.52% of the nation's aggregate adjusted gross income. In 2007, they earned 1.59% of the nation's aggregate adjusted gross income, more than three times as large as a share of the pie. In 1992, these high income earners paid an average of 26.4% of the AGI in taxes. By 2007, that had fallen to 16.6%. Only 71 members of the Flush 400 paid 25% of more of their AGI in federal income taxes.

On an after federal taxes tax basis, the Flush 400 have seen their share of national AGI go from 0.40% to 1.25%, a 313% increase over fifteen years.

The average AGI of a member of the Flush 400 is $344.8 million per year; the cutoff for membership in the Flush 400 is $138,815,000. This cutoff has increased in both real and inflation adjusted terms over the past sixteen years.

Two-thirds of that income (66.3%) was classified as a capital gain for tax purposes (in 1992 it was 36.1%). Income classified as salaries and wages was only 6.5% of the income of the Flush 400 (in 1992 it was 26.2%). Sole proprietorship and farm income fell from 5.2% of AGI in 1992 to 0.1% of AGI in 2007. Partnership and S corporation income has fallen from 17.7% of Flush 400 income in 1992 to 12.2% in 2007. In 1992, earned income accounted for 49.1% of the income of the Flush 400, in 2007, earned income accounted for 18.8% of the income of the Flush 400.

The key trend is the tax driven convertion of wage, salary, and closely held non-C corporation business income into capital gains income like stock options and carried interests. This accounts for 100% of the shift in the income mix to capital gains income for the Flush 400. Other kinds of income, collectively, held a steady percentage of the total (although, of course, there were some variations in the exact mix in other categories of income).

Over sixteen years about a third of members of the Flush 400 appeared only in one year, while seven appeared every year. A little under half of them appeared three or more times in sixteen years.

President Clinton started the practice of releasing the information. George W. Bush refused to release the information. President Obama reinstated the public release and back filled the information gap from the Bush Administration.