IRS Statistics of Income on 2007 top 400 AGI taxpayers shows taxpayers increasing wealth, lower effective tax rates

Recently, the IRS Statistics of Income Division (IRS SOI) released data regarding the individual income tax returns of taxpayers with the top 400 highest adjusted gross incomes (AGIs) for the 2007 tax year. According to the IRS, the top 400 taxpayers reported a total of over $137.9 billion in AGI during 2007, an average of over $344 million per taxpayer. This represented 1.59 percent of all reported AGI, an increase from 1.31 percent in 2006. The average income tax rate for the top 400 taxpayers, however, has continued its slide from a 29.93 percent high in 1995 to 16.62 percent in 2007. In the President's Address section of the Office of Management and Budget's Fiscal Year 2010 Budget Blueprint, President Obama used the IRS's data on the top 400 taxpayers as evidence of a disproportionate share of the nation's wealth accumulating in the very wealthy.

Tax rates

The IRS SOI observed that during 2007, 220 of the top 400 taxpayers fell within the statutory tax rate of 35 percent or over. In other tax brackets, 145 taxpayers reached 26 percent to 28 percent, and 35 taxpayers were between zero and 26 percent.

However, a majority of the taxpayers on the list (137) had an effective (or average) income tax rate between 15 and 20 percent. This was closely followed by 127 taxpayers with an average rate of 10 percent to 15 percent, and 40 taxpayers who paid a 20 to 25 percent average tax rate.