Americans now need at least $500,000 a year to enter top 1%

Though the rich in the U.S. are doing well, they also pay the greatest share of taxes.

By Alex Tanzi and Ben Steverman / Bloomberg News

One definition of rich is getting into the top 1%. If that’s your goal, it’s becoming harder to reach.

The income needed to exit the bottom 99% of U.S. taxpayers hit $515,371 in 2017, according to Internal Revenue Service data released this week. That’s up 7.2% from a year earlier, even after adjusting for inflation.

Since 2011, when Occupy Wall Street protesters rallied under the slogan “We are the 99%,” the income threshold for the top 1% is up an inflation-adjusted 33%. That outpaces all other groups except for those that are even wealthier.

To join the top 0.1%, you would have needed to earn $2.4 million in 2017, an increase of 38% since 2011. The top 0.01% threshold has jumped 46%.

Meanwhile, the top 0.001% — an elite group of 1,433 taxpayers — earned at least $63.4 million each in 2017, up 51% since the Occupy protests.

The median taxpayer, at the 50th percentile, has seen income rise 20% since 2011.

Though the rich in the U.S. are doing well, they also pay the greatest share of taxes. The top 1% earned 21% of the country’s income, and paid 38.5% of federal individual income taxes. The top 1% paid a greater share of income tax to the U.S. Treasury than the bottom 90% combined (29.9%).

Working-class taxpayers do pay many other taxes, including federal payroll taxes for Social Security and Medicare, and state and local levies. However, the bottom half of the income distribution pays very little toward the federal income tax.

The top 50% — taxpayers with an adjusted gross income of $41,740 or more — paid 97% of taxes, and earned 89% of income reported to the IRS.

The income tax brings in about half of all federal revenues, according to the Congressional Budget Office.

Overall, the IRS data show the U.S. collected $1.6 trillion in income taxes from 143.3 million taxpayers reporting a total of $10.9 trillion in adjusted gross income in 2017, the most recent year available.

The IRS data don’t reflect the effects of the tax overhaul signed by President Donald Trump at the end of 2017. The law lowered individual income tax rates while eliminating many deductions and slashing the rate on U.S. corporations to 21% from 35%.

IRS data through 2017 largely show that average tax rates paid have increased in recent years.

Talk to us

More in Herald Business Journal

FILE - A Boeing 737 Max jet prepares to land at Boeing Field following a test flight in Seattle, Sept. 30, 2020. Boeing said Tuesday, Jan. 10, 2023, that it took more than 200 net orders for passenger airplanes in December and finished 2022 with its best year since 2018, which was before two deadly crashes involving its 737 Max jet and a pandemic that choked off demand for new planes. (AP Photo/Elaine Thompson, File)
Boeing inks deal for up to 300 737 Max planes with Ryanair

At Boeing’s list prices, the deal would be worth more than $40 billion if Ryanair exercises all the options.

Logo for news use featuring Snohomish County, Washington. 220118
Four recognized for building a better community

Economic Alliance of Snohomish County hosts annual awards

Logo for news use featuring Snohomish County, Washington. 220118
Business Briefs: Pandemic recovery aid and workforce support program

Snohomish County launches small business COVID recovery program, and is now accepting NOFA grant applications.

Elson S. Floyd Award winner NAACP President Janice Greene. (Olivia Vanni / The Herald)
Janice Greene: An advocate for supplier diversity and BIPOC opportunities

The president of the Snohomish County NAACP since 2008 is the recipient of this year’s Elson S. Floyd Award.

Emerging Leader Rilee Louangphakdy (Olivia Vanni / The Herald)
Rilee Louangphakdy: A community volunteer since his teens

Volunteering lifted his spirits and connected him with others after the death of a family member.

Emerging Leader Alex McGinty (Olivia Vanni / The Herald)
Alex Zitnik-McGinty: Find a group you like and volunteer!

Her volunteer activities cover the spectrum. Fitting in “service work is important as we grow.”

Opportunity Lives Here award winner Workforce Snohomish and director, Joy Emory. (Olivia Vanni / The Herald)
Workforce Snohomish receives Opportunity Lives Here Award

Workforce offers a suite of free services to job seekers and businesses in Snohomish County.

Henry M. Jackson award winner Tom Lane. (Olivia Vanni / The Herald)
Tom Lane: An advocate for small and local businesses

The CEO of Dwayne Lane’s Auto Family is a recipient of this year’s Henry M. Jackson Award.

John M. Fluke Sr. award winner Dom Amor. (Olivia Vanni / The Herald)
Dom Amor: Working behind the scenes to improve the region

Dom Amor is the recipient of this year’s John M. Fluke Sr. Award

Dr. David Kirtley at the new Helion headquarters in Everett, Washington on Wednesday, Jan. 19, 2022  (Olivia Vanni / The Herald)
Everett nuclear fusion energy company nets first customer: Microsoft

The Everett company, on a quest to produce carbon-free electricity, agreed to provide power to the software giant by 2028.

Hunter Mattson, center, is guided by Blake Horton, right, on a virtual welding simulation during a trade fair at the Evergreen State Fairgrounds in Monroe, Washington, on Wednesday, May 3, 2023. High school kids learned about various trades at the event. (Annie Barker / The Herald)
Trade fair gives Snohomish County kids glimpse of college alternatives

Showcasing the trades, the Trade Up event in Monroe drew hundreds of high school students from east Snohomish County.

A Tesla Model Y Long Range is displayed on Feb. 24, 2021, at the Tesla Gallery in Troy, Mich.  Opinion polls show that most Americans would consider an EV if it cost less, if more charging stations existed and if a wider variety of models were available. The models are coming, but they may roll out ahead of consumer tastes. And that could spell problems for the U.S. auto industry, which is sinking billions into the new technology with dozens of new vehicles on the way.  (AP Photo/Carlos Osorio)
Tesla leases space at Marysville business park

Elon Musk’s electric car company reportedly leased a massive new building at the Cascade Business Park.