7 Surprising Things You Didn’t Know About The Ultra Rich

By Scott Klinger | ( Inequality.org ) | – –

New data provides a glimpse into the lives of the richest of rich—how the 400 highest earners make their money and pay their taxes.

Each year, the Internal Revenue Service (IRS) publishes data on the collective income of the 400 taxpayers who report the most income on their tax returns.

At the end of December, the IRS released cumulative data for the top 400 for the tax year 2013. The delay in reporting is because tax returns can be audited and amended for three years past the filing deadline.

Mainstream media widely reported that the top 400 paid an effective tax rate of 22.89 percent in 2013, up from 16.72 percent the previous year. This sharp increase in tax rate was the result of this group of elite tax payers booking all of the capital gains and dividends they could push forward into 2012, ahead of a 2013 increase in preferential tax rates from 15 percent in 2012 to 23.9 percent in 2013. As a result, capital gains as a share of income in 2012 was usually high and capital gains as a share of total income in 2013 were artificially low, resulting in more income being taxed at higher rates.

Here are seven additional facts reported by the IRS in its report:

It took $100.1 million to make the cut as one of the nation’s
400 highest income taxpayers in 2013.

The 400 highest income taxpayers had a collective adjusted gross income of $106 billion, an average of $265 million per Top 400 taxpayer.

The top 400 taxpayers filed 0.0003 of the nation’s 147.4 million tax returns but reported 1.17 percent of the nation’s total income.

More than two-thirds (68.2 percent) of the income of the top 400 taxpayers comes from investment income taxed at about half the rate as income earned from work: capital gains accounted for 51.7 percent of top 400 taxpayers’ income; dividends 10.8 percent and interest, 5.8 percent.

Top 400 taxpayers reported $57.4 billion of investment income that was subject to lower preferential rates, nearly 10 percent of the total reported on all 147 million tax returns. If this investment income would have been taxed at the same rates as income from work, these taxpayers would have paid an estimated $10.9 billion in additional income taxes.

Top 400 taxpayers deducted $12.9 billion in charitable gifts on their 2013 tax returns, 6.6 percent of the total charitable deductions claimed on 2013 tax returns. This amount is 1.2 percent of the top 400’s adjusted gross income.

The top 400 taxpayers collectively paid $24.3 billion in federal income taxes in 2013, 1.96 percent of the total income taxes paid. This represents the third highest share of taxes paid by the top 400 taxpayers since 1992.