Tax Reform for the Rich: Reduce the Rates but Lose the Breaks - nytimes

When the Trump administration unveils new details of its tax plan, promised for next week, one group of taxpayers will be under the microscope: the rich.

That’s because they take advantage of so many tax breaks that few, if any, pay the top rate of 39.6 percent. Eliminating at least some of those breaks would make it possible to reduce tax rates for the highest earners (and everyone else) while raising the same or even more in total revenue.

Doing so would reduce rates while broadening the base, and simplify the tax code while making it fairer — goals that nearly all economists from across the political spectrum say they support.

The administration, too, seems to have embraced such an approach. “The rich will not be gaining at all,” President Trump said last week.

So who are the rich?

Based on comprehensive data now available from the Internal Revenue Service, it’s possible to pinpoint who pays what based on their percentile of adjusted gross income. The top 1 percent seems a fair representation of the rich. This group — about 1.4 million taxpayers — reported adjusted gross incomes of over $466,000 in 2014, the most recent year for which the data is available.

The top 1 percent paid a total of $542.6 billion in federal tax, or an astounding 39.5 percent of the total income tax. If you want to take a more expansive view of rich, the top 10 percent (who earn upward of $133,000) pay 71 percent of the total tax. 

Do they pay the top rate? Not by a long shot. The average rate for the top 1 percent is 27 percent of their adjusted gross income. (It’s even lower — 24 percent — for the superrich in the 0.001 percent bracket.) The top 10 percent pay an average of 21 percent. - Read More

Tax Reform for the Rich: Reduce the Rates but Lose the Breaks - The ...

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