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February 17, 2012
Working All Day for the I.R.S.
By JAMES B. STEWART


Mitt Romney is not alone. I thought Mr. Romney’s 13.9 percent federal tax rate would be hard to beat. But among the 400 Americans with the highest adjusted gross incomes in 2008, 30 of them paid less than 10 percent and another 101 paid less than 15 percent. And these people earned, on average, more than 10 times Mr. Romney’s $21.7 million — an average of $270.5 million each.

Relatively few taxpayers pay an enormous percentage of the total federal income tax, and most of them are people who work for a living and have adjusted gross incomes of $100,000 to $500,000, which is the sweet spot for tax revenue. They account for 20.2 percent of total returns but pay a whopping 44.9 percent of total tax. The average tax rate for this group ranges from 11.9 percent for those with less than $200,000 in adjusted gross income to 19.6 percent for those with $200,000 to $500,000. Above those income levels, the rate rises to close to 25 percent and then declines to 22.6 percent for taxpayers earning more than $10 million.

The I.R.S. doesn’t break down the data for incomes above $10 million, but the results for the top 400 returns suggest that the rate continues to decline as incomes rise. The top 400 paid an average of $49 million, or 18.1 percent of their adjusted gross income, in federal tax — lower than taxpayers in the $200,000 to $500,000 bracket. They reported an average $14.1 million in state and local taxes, bringing their total income tax level to about 23 percent of adjusted gross income, far below my rate. And not one of them paid more than 35 percent of their adjusted gross income in federal tax.

I spoke this week to the investigative reporters Don Bartlett and Jim Steele, who are working on a sequel to their best-selling book “America: What Went Wrong,” first published in 1992. They said that tax inequities had gotten worse since 1994, when they published “America: Who Really Pays the Taxes,” and described the tax system as “out of control.”

Now, “The tax code has been so skewed against most people, with remarkable tax cuts for folks at the top, that the whole concept of fairness has gone out the window,” Mr. Steele said. Mr. Bartlett, pointing to disparate rates even among people in the same income brackets, added: “There’s enormous horizontal inequity, enormous.”.

http://www.nytimes.c...agewanted=print