How Does IRS Calculate Top Percent Income Earners?

Economics Economics Questions
1

When people say, top 1 percent of income earners, or top 5 percent, or top 10 percent of income earners, like Paul Craig Robert’s article:

" In 2006, the most recent year for which data is available, Americans whose tax returns placed them in the top 1 percent earned 22.1 percent of adjusted gross income and paid 39.9 percent of all federal individual income taxes.
The top 5 percent, defined as rich by President Obama, paid 60.1 percent of all federal individual income taxes. The top 10 percent paid 71 percent.
Those Americans whose earnings placed them in the bottom half of the income distribution paid less than 3 percent of the individual income tax collected. "

http://www.taxfoundation.org/news/show/250.html

Is it top percent out of the entire American population? In other words, are they including children and adults who don’t work?

2

Workers who report no income do not pay income taxes. The statistics are based on workers who report income. I think $100K/year puts you in roughly the 90th percentile of income earners.

So to take it a step further, one reason Americans don’t get worked up about federal income taxation is because at least half of them don’t pay it. Public sector employees and contractors in the top 50% don’t count either.

The politically popular (guess why) EIC is actually a direct transfer payment from people who pay taxes to people who don’t pay taxes.

Bottom line, the productive 20-40% carry the non-productive 60-80% around on their backs. Glorious democracy.

3

No. If you don’t file to pay taxes, you aren’t included in the percentile.

4

Seems to be arbitrary.