2011-11-13

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 5th 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).