The 1% and the 99%

The Occupy Wall Street movement distinguishes between the 1% (who have a lot of money) and the 99% (who have less). Just how rich are the 1%? Income tax data for the 2008 tax year, published by the Internal Revenue Service, gives us a perspective.

That spike running up the right-hand edge of the graphic is the average income of tax filers in the 1%. 

A quintile is a fifth, 20%. The upper quintile of US tax returns is a set of returns with higher incomes than the other four-fifths of returns. A percentile is a hundredth.

The chart below shows the average incomes by quintiles, with the upper quintile broken into the 19% not-quite-rich and the 1%.

If you lined up 100 people representative of the quintiles and the 1%, and you stacked up their 2008 income in dollar bills, in a nice orderly row, then it would look something like the chart.

The income of the 1% person is bigger than the combined incomes of the 80 people in the lower 4 quintiles. The income of the 1% person is bigger than the combined incomes of half the other people in the 5^th quintile.

If you are in the 1%, then your annual income is at least $500,000. The average income for the 1% is a little more than $1.4 million.

If you are in the upper, or fifth, quintile, but not in the 1%, then your annual income is more than $75,000, with an average of $97,000 for this group.

Quintile	Avg Taxable Inc $000	Min Adj Grs Inc $000	Aggregate Taxable Inc $bil	1% of Aggr $bil
1 %	$1,414	$500	$1,271	$13
V ex 1%	$97	$75	$2,819	$28
IV	$34	$40	$1,038	$10
III	$16	$25	$368	$4
II	$5	$10	$150	$2
I	$0	$0	$6	$0

If the government increases everybody's overall income tax rate by 1%, then the 1% will pay $13 billion more, and the other 19% will pay $28 billion more, and the other 80% will pay $16 billion more.

(If you are interested, email me and I'll send you a copy of the detailed calculations using the IRS data.)

Sources:

Tables 1 and 2 for 2008, http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html (retrieved 13-Nov-2011).