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. Last Updated: 07/27/2016

Richest Americans Double Their Take, Pay Less

NEW YORK -- The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service. But their tax burden plummeted over the period.

The data, in a report that the IRS released Wednesday night, shows that the average income of the 400 wealthiest taxpayers was almost $174 million in 2000. That was nearly quadruple the $46.8 million average in 1992. The minimum income to qualify for the list was $86.8 million in 2000, more than triple the minimum income of $24.4 million of the 400 wealthiest taxpayers in 1992.

While the sharp growth in incomes over that period coincided with the stock market bubble, other factors appear to account for much of the increase. A cut in capital gains tax rates in 1997 to 20 percent from 28 percent encouraged long-term holders of assets, like privately owned businesses, to sell them, and big increases in executive compensation thrust corporate chiefs into the ranks of the nation's aristocracy.

This year's tax cut reduced the capital gains rate further, to 15 percent.

The data from 2000 is the latest available from the IRS, but various government reports indicate that salaries, dividends and other forms of income have continued to rise since then, even as the stock market has fallen.

The top 400 reported 1.1 percent of all income earned in 2000, up from 0.5 percent in 1992. Their taxes grew at a much slower rate, from 1 percent of all taxes in 1992 to 1.6 percent in 2000, when their tax bills averaged $38.6 million each.

Those numbers can be read to show that the wealthiest, as a group, carried a disproportionate share of the overall tax burden -- 1.6 percent of all taxes, versus just 1.1 percent of all income -- evidence that all sides in the tax debate will be able to find ammunition in the data.

In 2000, the top 400 on average paid 22.3 percent of their income in federal income tax, down from 26.4 percent in 1992 and a peak of 29.9 percent in 1995. Two factors explain most of this decline, according to the IRS: reduced tax rates on long-term capital gains and bigger gifts to charity.

Had U.S. President George W. Bush's latest tax cuts been in effect in 2000, the average tax bill for the top 400 would have been about $30.4 million -- a savings of $8.3 million, or more than a fifth, according to an analysis of the IRS data by The New York Times. That would have resulted in an average tax rate of 17.5 percent.

The rate actually paid by the top 400 in 2000 was about the same as that paid by a single person making $123,000 or a married couple with two children earning $226,000, according to Citizens for Tax Justice, a labor-backed group whose calculations are respected by a broad spectrum of tax experts.

Detailed information about high-income Americans has become increasingly important in setting tax policy, because the government relies on the top 1.3 million households for 37.4 percent of individual federal income tax revenue. The half of Americans who earned less than $27,682 in 2000, paid less than 4 percent of income taxes.