A NOTE ON SOURCES
Chart One: Re-creating the Gap that Gave Us the Great Depression
The most precise data on the income of America’s most affluent have come, in recent years, from the work of economists Emmanuel Saez and Thomas Piketty. Their most recently updated figures for income inequality in the United States, available online from the Emmanuel Saez home page, cover the years 1913 (the first year of the modern federal income tax) through 2006.
For this time period, Saez and Piketty provide data on income for the top 1 percent, the top 0.5 percent, the top 0.1 percent and the top 0.01 percent. They also provide income data for the top 5 and 10 percent, as well as the bottom 90 percent, starting in 1917. For our “Re-creating the Gap” graph, we tapped data from the Saez-Piketty Table A6, titled “Top Fractiles Income Levels (Including Capital Gains) in the United States, 1913-2006.” This table includes capital gains income.
Chart Two: Our Incredible Shrinking Top Marginal Rate
A complete historical rundown of federal income tax rates appears on the IRS Statistics of Income site. Our data on statutory rates comes from Table 23: “U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Bracket Tax Rates, and Tax Base for Regular Tax, Tax Years 1913-2006.”
The data on what taxpayers in 1944 who made at least $1 million (in 2005 dollars) actually paid in federal income tax comes from the IRS article “Individual Income Tax Shares and Average Tax Rates, Tax Years 1916-1950,” by Fritz Scheuren and Janet McCubbin (Statistics of Income Bulletin, Vol. 8, No. 3, Winter 1988-89). This article, in Table 1, breaks down taxpayers into current dollar brackets of $100,000-$250,000, $250,000-$500,000, $500,000-$1 million and $1 million and up. $100,000 in 1944 equals $1.1 million in 2005 dollars. Taxpayers making over this level in 1944 paid 65.3 percent of their incomes in federal income tax.
The data on what taxpayers making at least $1 million in 2005 actually paid in federal income tax comes from the IRS Statistics of Income data Table 1.1: Selected Income and Tax Items, by Size and Accumulated Size of Adjusted Gross Income, Tax Year 2005. This table provides figures on average income for taxpayers reporting $1 million to $1.5 million, $1.5 million to $2 million, $2 million to $5 million, $5 million to $10 million, and $10 million and up. All these taxpayers together had a combined income of $1,026,045,266,000 in 2005 and paid $235,663,567,000 of that, or 22.9 percent, in tax.