Tax Rates for the Wealthy - 4/23/14

Apr 23, 2014

If you make between half a million and ten million dollars per year, today’s installment may prove pretty upsetting.  You may find yourself gripping the wheel of your Mercedes a bit tighter than usual. 

That’s because recently released figures from the Internal Revenue Service indicate that the so-called superrich, those with annual adjusted gross incomes of more than $10 million, have tax rates that are significantly lower than those of the very rich, or those earnings more than half a million dollars but less than 10 million dollars.  During a recent year, the superrich paid 20.4 percent of their income in federal income taxes while the merely very rich paid 24.5 percent.  

According to the New York Times, on average, each of the roughly 11,500 taxpayers who reported in excess of $10 million in income would have had to pay an extra million dollars in taxes had they faces the same tax rates as the very rich.  The reason the superrich pay a lower percentage of their adjusted gross income in the form of federal taxes has to do with the preferential tax treatment afforded to investment income.