As the Presidential election heats up, it is important to separate the facts from the fiction. Not all top taxpayers are employers or billionaires. Both political parties are guilty of skewing the facts.
By definition, the top 2% of U.S. taxpayers are individuals with taxable income of more than $200,000 a year and married couples with taxable income of more than $250,000 a year.
According to Bloomberg News, the top 2% of taxpayers are:
- Two-earner professional couples living on the East and West Coasts.
- Doctors, lawyers, engineers and Wall Street executives.
- Most are not employers.
According to 2005 income tax data:
- Engineers, architects and information technology workers make up 9.6% of the top 5% of taxpayers.
- Over 75% of the high-income households were dual-income households with both spouses working.
A 2011 Treasury Department analysis found that, depending on the definition of small business:
- Only about one-third of small business income is subject to the top two income tax rates.
- Among taxpayers subject to the top two income tax rates, only 25% are small business owners and employers.
As always, learn the facts before you cast your vote.
About Bruce J. Berno, CFP®
Bruce J. Berno, CFP® is the founder of Berno Financial Management, Inc. a fee-only comprehensive personal financial planning and investment advisory firm headquartered in Cincinnati, Ohio. Since 1993, Berno Financial Management has been helping individuals and families achieve financial peace of mind. For more information about Berno Financial Management, visit http://www.bernofinmgt.com.