Background Information: Of the 1,263,928 individuals who filed tax returns for 2010 from Nevada 21,187 reported adjusted gross incomes of more than $200,000 but less than $500,000. 3,778 reported income between $500,000 and $1,000,000 and only 2,372 reported incomes above $1,000,000. [SOI tax] A home-made pie chart of the returns yields this:
For those who prefer numbers: 2.07% Nevadans reported little or no income; 38.84% reported adjusted gross incomes under $25,000; 27.39% reported AGI between $25,000 and $50,000. 13.61% reported AGI between $50,000 and $75,000 for 2010. 7.64% reported AGI between $75,000 and $100,000. 8.28% reported adjusted gross incomes between $100,000 and $200,000. Now the percentages start to drop dramatically.
1.68% of Nevadans reported income ranging from $200,000 to $500,000; and, 0.30% had AGI’s in the $500,000 to $1,000,000 range. Only 0.19% reported income above $1,000,000 in 2010. [SOI IRS] 2.17% of total filers from Nevada were in the over $200,000 AGI categories.
The historical tables from the Internal Revenue Service don’t break out the numbers from the top 0.19% into millionaires and billionaires. Please notice that we aren’t discussing the top 1% at this point, but the top 0.19% because those in the top 1% aren’t necessarily the same people who are enjoying the perks and benefits of tax breaks and havens of the ultra-rich.
“The top 1 percent includes people who made many hundreds of millions of dollars and perhaps some with incomes of more than $1 billion, official government data will show when it is released in two years.
Economically, those just entering the top 1 percent have nothing in common with those in the top tenth of the top 1 percent. Someone at the entry point for the top 1 percent would need 29 years to make $10 million, and more than 2,900 years to make $1 billion.
The point is that while all those in the top 1 percent are certainly well off, the vast majority still go to work every day.” [Reuters 2011]
Thus in Nevada only 0.19% of all income earners in 2010 had income which put them in the “over $1,000,000” category, but it is entirely possible that many of these filers rely on income from medical practices, legal offices, or other remunerative employment which still doesn’t mean they have the luxury of sitting back and “clipping coupons.” Nationwide, as of 2008 a person in the top 0.10% ($5.2 million and $7.5 million) could simply invest in the bond market and maintain an income categorized as within the top 1%. [Reuters] Between capital gains and carried interest these people are doing very well.
“Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.” [Forbes]
And are these people the Job Creators? Probably not. An investment manager explains:
The higher we go up into the top 0.5% the more likely it is that their wealth is in some way tied to the investment industry and borrowed money than from personally selling goods or services or labor as do most in the bottom 99.5%. They are much more likely to have built their net worth from stock options and capital gains in stocks and real estate and private business sales, not from income which is taxed at a much higher rate. These opportunities are largely unavailable to the bottom 99.5%.
Some will fall into the private equity category within the aforementioned “investment industry.”
Carried Away With Interest
Carried interest is defined as “A share of any profits that the general partners of private equity and hedge funds receive as compensation, despite not contributing any initial funds. This method of compensation seeks to motivate the general partner (fund manager) to work toward improving the fund’s performance.”
How about the repeal of the estate tax? Remember, the first $5.2 million in the estate is exempt. This would save the top 0.1% a tidy $15 billion. [CSM] The latest figures from 2010 indicate that only 0.5% of estates in Nevada owed any federal estate tax. [CTJ pdf]
Beyond being a pig in a poke in which how all the generous tax cuts might be paid for remains something confined to former Governor Romney’s quiet rooms, the Romney tax plan is of primary benefit to those 0.19% of Nevadans in the upper income brackets — and not really all that generous to the working members of that classification. It is especially generous to those in the investment industry who are already doing quite well. And, it would only benefit about 0.5% of the estates in Nevada.
The plan is an excellent illustration of the bespoke attitude of the top 1% of the top 1% wherein resides the “I got mine, now you try to get yours…” condescension toward the American middle class.