a/ do not have this type of income, or

b/ the income is generated in tax deferred accounts.

Why is that a problem?

Because households are not standard units. There are different numbers of people in different households. There are different numbers of *working* people in different households. Households vary from one income level to another, one age group to another, etc.

For example, in 2000, the top 20% of households (by income) had 19 million heads of household working, while the bottom 20% of households had fewer than 8 million. Additionally, almost six times as many people in the top 20% of households worked full time as the number of people in the bottom 20%.

In absolute terms, 3.9 heads of household worked full-time and year round in the top 5% of households, and just 3.3 million in the bottom 20%. No surprise there — more people working tends to equal more income.

So, again, we ought to make sure we’re talking about real people rather than making apples to oranges comparisons of statistical categories.

Definitely an interesting link. One thing I would add, though, is that statistical categories like “the top 1%” or “the bottom 50%” are not fixed groups of people. Rather they are transient categories into and out of which people go every year.

Another issue is that your link did not count *all* the assets people possess, such as transfers in kind or government assistance. Quoting from Thomas Sowell’s Economic Facts and Fallacies:

“Since people in the bottom 20% of income recipients receive more than two thirds of their income from transfer payments, leaving those cash payments out of the statistics greatly exaggerates their poverty – as does leaving out in-kind transfers such as subsidized housing.”

In other words, only about 22-25% of the “actual economic assets at their disposal” are counted.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Looked at with this additional info, what’s reported above doesn’t seem so unfair, does it?

[img]http://imgur.com/aT1Gn.png[/img]

Josh – I saw you updated your post a bit, but it’s not yet 100%.

You suggest someone earning $375,651 (net taxable, of course) will pay $142,747 in tax. The chart I show above shows that a single person will only pay $108,421.

I know your article was to make a point, but I’d still not overlook some detail in doing so. Single or marries both have a standard deduction and exemption. So for that single person, the first $9350 of income isn’t taxed at all.

Last, you state the top 1.4M people earned $2,008,259 trillion. I think you meant million here. Forgive me, I’m a stickler for accuracy.

Joe

Chelsea from TurboTax. Our writer Josh updated the post today, and responds to your comments Clark above: http://blog.turbotax.intuit.com/tax-tips/how-is-americas-income-tax-burden-weighted/

I really appreciate the keen eye that you all have had in regard to the post, and your attention to these details has helped us make it better

Athensguy, we take our product accuracy so seriously, we have a guarantee! No worries there.

Thanks everyone,

Chelsea

You shouldn’t be worried about the validity of the TurboTax software because of an error in one blog post. It is my understanding that many blog posts here are by guest contributors, where the authors are not associated with Intuit or Turbotax at all. The error probably slipped through only because one blog moderator missed it.

I am quite confident that the software itself is reviewed very carefully by many experts and very thoroughly tested.

1) I used Turbotax for my 2009 taxes

2) The tax table is wrong

This illustrates how ridiculously huge the gap has become between the rich and the rest of us.

Thanks so much for this detailed comment. I’m going to send this to our writer, and check back in after he takes a look.

Chelsea (from TurboTax)