Saturday, September 24, 2011

Millionaires, Real Millionaires and Billionaires

John Steele Gordon in The Washington Post joins those pointing out that Americans with incomes over $1 million do pay more income tax: Five myths about millionaires.
According to the IRS, those with adjusted gross incomes of more than $1 million paid an average of 23.3 percent in federal income taxes in 2008; those earning between $100,000 and $200,000 paid 12.7 percent; and those earning between $50,000 and $100,000 paid 8.9 percent. Half of American families don’t make enough money to pay income taxes at all.
Wish Gordon's column didn't perpetuate the confusion between people with net worths of $1 million or more and people with incomes of $1 million or more. (Gordon assumes a net-worth of $1 million can generate interest of $50,000 a year. That's far from safe and easy these days.)

In The New York Times, Paul Sullivan discusses Warren Buffett – who is a billionaire, not a millionaire – and his secretary, who clearly makes a lot more than the average executive assistant. Sullivan's description of the president's proposed phase-outs of certain exemptions and deductions suggests they could inflict serious pain, moving people with income exxceeding the 28% bracket into effective rates far higher than 35%.

Oh, well. As Ron Lieber points out, at least some of these poor souls might avoid the AMT.

How to Tell a Billion From a Million

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