Wednesday, November 22, 2017

More on Taxes

I like numbers and so tax policy can be quite an interesting subject for analysis. While my primary focus is on immigration and "national question" issues, taxes can be a bit of a respite for me.

This data (ExCel file) provides a starting point for determining how tax rate changes would affect government revenues. It's the filing data for the 2016 filing season (i.e. 2015 taxes) at week 47 (about November).

In particular, it shows that there are at least 431,335 filers (counting joint filers as one filer) with incomes of over $1,000,000 (numbers are likely a bit higher, assuming some tax returns were received more than 47 weeks into 2016.

The overall adjusted gross income (AGI) for these people is about $1.377 trillion ($944 billion in non-capital gains), which would be more than $945 billion if you exempt the first million from the count ($513 billion in non-capital gains if you simply take the average AGI and subtract the percentage that is capital gains before subtracting the million - this is not quite a precise way of measuring this, as the exact distribution of capital gains among people of an income class will affect the results, but it's a good working estimate). This means that even if we make conservative assumptions on growth, over the next ten years these people would make at least $10 trillion ($5 trillion non-capital gains) even if we do not count the first million each makes.

In other words, every 1% tax on income over $1 million would make $100 billion over that time, assuming static scoring (I think that's the right term, I mean assuming that the tax does not change the economy or behavior in a way that alters revenue).

So a 44% tax rate over $1 million (accompanied with a 24.4% capital gains rate for income over $1 million) would make $440 billion (44% being 4.4% higher than 39.6%). Even if you did not tax capital gains higher, it would bring in a little more than half as much - say $240 billion.

There are 44,416 people making over $5 million. Total adjusted gross income is $668 billion ($372 billion non-cap gains), $446 billion of which remains given an exemption of $5 million ($150 billion non-cap gains). (

This would mean that a similar rate levied on incomes over $5 million would yield a little less than half as much - $210 billion, perhaps. If you only taxed regular income, it would be about a third as much - say about $70 billion.

Obviously, there is a lot of wiggle room to use here if one wanted to shift taxes. I am all for moving taxes from corporate to high-income personal.

That is all.

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