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1 A Profile of the High-Income Taxpayers in the Middle of the Tax Cut Debate 1 (2010)

handle is hein.taxfoundation/ffcehxz0001 and id is 1 raw text is: September 22N21 No. 247 ..& ..,X. -,. ..... , A Profile of the High-Income Taxpayers in The Middle of the Tax Cut Debate By the Tax Foundation's Data Analysis Division Introduction Bush tax cuts: extend them, partially extend them, or allow them to expire? That's the number one question in Washington right at the moment and will likely continue to be until Congress acts. Depending upon whose side you are on, the entire debate centers around leading Democrats' unwillingness to extend the tax cuts for the highest-income earners or Republicans' unwillingness to let the tax cuts for high-income earners expire. Either way, it is these high-income taxpayers who are at the center of this major policy question. But who are these high-income taxpayers? Tax returns are just pieces of paper with numbers on them, but they represent real people. Other than the fact that they reported a comparatively large amount of income on their 1 040s for at least one tax year, what do we know about them? Are these taxpayers in the top 2-3 percent married? Do they have college degrees? Do they have children? Where do they live? How old are they? Where do they work? In short: Are the rich different? While most of these factors are not critical pieces of information for setting tax policy, it is still informative (and entertaining) to take a look at what general characteristics tend to correlate with being among this approximately top 3 percent of the population. High-Income Tax Units: Married, Highly-Educated, and Metropolitan The differences are what one would probably expect: high-income taxpayers are more likely than others to be married, own a home, have children, live in cities, and have a college degree (see Table 1). Specifically, tax units above the so-called Obama tax cut threshold of $200,000 in AGI for singles and $250,000 for couples are over 80 percent more likely to be married than those below the threshold, and over 50 percent more likely to have a child. Those high-income taxpayers are also more than twice as likely to have at least a bachelor's degree, and they work more hours per week. A higher percentage of high-income tax units live in the Northeast and West, and they are more likely to live in cities, especially big cities and the regions that surround them. For example, high-income tax units are about 50 percent more likely to live in a metro region with at least 2.5 million people (about the size of Denver) than are those beneath the $200,000/$250,000 threshold. And while big cities have more rentals, these high-income tax units are still about 30 percent more likely to live in an owner- occupied home.