U.S. Income Tax

Contact: Todd A. Berry
608.241.9789 or wistax@wistax.org
October 24, 2008

U.S. Income Tax Data for Election Time and Beyond
WISTAX Recaps Information from 2006 Federal Returns

MADISON—In a time of year when candidates and newly elected officials discuss who does or does not pay federal income taxes, the Wisconsin Taxpayers Alliance (WISTAX) released a summary of U.S. data made available earlier this year by the IRS. WISTAX is a nonprofit, nonpartisan, public-policy research organization dedicated to citizen education for over 76 years.

Of 138.4 million (m) federal income tax filers in 2006, the largest single group was those with adjusted gross income (AGI) of $15,000 or less. They accounted for 27.2% of returns and $188.6 billion (2.4%) of the total $7,982.7 billion (b) in AGI reported. They paid 0.3% of U.S. income taxes.

When those with incomes up to $30,000 are added, almost half (48.6%) of filers are represented. They accounted for 10.6% of AGI and 2.5% of income taxes paid.

At the other end of the income spectrum, the group with the largest share of total income reported (30.5%) had AGI in excess of $200,000. Due to the progressive nature of the federal income tax where rates increase and tax benefits decline as income rises, this group accounted for 3.0% of federal filers and paid $545.2b (53.1%) of the total $1,026.3b in U.S. income taxes paid.

When all returns with over $100,000 in AGI are examined, this expanded group accounts for about a tenth (11.7%) of filers, about half (50.7%) of income, and almost three-fourths (73.6%) of federal income taxes paid in 2006.

A useful "breakpoint" for summarizing federal income tax statistics falls at $50,000 of adjusted gross income. Filers up to this level represented two-thirds (66.6%) of returns, slightly more than one-fourth (22.8%) of total income, and paid 8.3% of U.S. income taxes.

Filers above the $50,000 threshold are a mirror image of those for the group below. They represented the remaining third (33.4%) of filers, reported more than three-fourths (77.3%) of income, and paid 91.6% of the U.S. income taxes.

Wisconsinites filing 2006 federal returns have a slightly different profile than the nation. The state had more filers in the $50,000-$100,000 group (24.5% vs. 21.4%) but fewer filers (2.0% vs 2.9%) with income above $200,000.

For a copy of the WISTAX report, "U.S. income tax facts for the quadrennial season" write: WISTAX, 401 North Lawn Ave., Madison, Wisconsin 53704; e-mail, wistax@wistax.org; or call 608.241.9789. o

(Editors' Note: An electronic version of this column is available at www.wistax.org.)

The Wisconsin Taxpayers Alliance, founded in 1932, is the state’s oldest and most respected private
government-research organization. Through its publications, civic lectures, and school talks, WISTAX aims to improve Wisconsin government through citizen education. Nonprofit, nonpartisan, and independently funded, WISTAX is not affiliated with any group—national, state, or local—and receives no government support.