Tax rates

After Obama proposed the Buffett rule, there were a slew of articles and blogs claiming that the rich actually pay higher rates than the rest of us. Some of the numbers were obviously just plain made up. So I decided to see if the statistics were available. Turns out they're pretty easy to get. Here's a start: IRS stats.

I used the data set labeled Table 1.1 for 2009. Now the tax codes are pretty complicated, so it's useless to compare published rates. But it's easy to see what people are actually paying. I took the total income taxes paid in each bracket. I added the total FICA (employee and employer, they're easy to compute) and divided by the total Adjusted Gross Income in each bracket to get an effective tax rate. Here's a graph:



Notes:

• Not included are sales taxes, property taxes, estate taxes, etc. None of which are tied directly to income.


• The rates max out somewhere under $1M a year. A millionaire does not have that much income, so Obama's description is not exactly accurate, but the principle is dead on.


• I repeat, the income tax part of this data is what people are actually paying, not derived by any tax rules. No loophole shenanigans here.


• This entire post is public domain. Use it to your heart's content.