U.S. Incomes Fell Sharply in 2009:
IRS Data * Reuters
|U.S. incomes plummeted again in 2009, with total income |
down 15.2 percent in real terms since 2007, new tax data
showed on Wednesday.
The data showed an alarming drop in the number of
taxpayers reporting any earnings from a job -- down
by nearly 4.2 million from 2007 -- meaning every 33rd
household that had work in 2007 had no work in 2009.
Average income in 2009 fell to $54,283, down $3,516,
or 6.1 percent in real terms compared with 2008, the
first Internal Revenue Service analysis of 2009 tax
returns showed. Compared with 2007, average income
was down $8,588 or 13.7 percent.
Average income in 2009 was at its lowest level since
1997 when it was $54,265 in 2009 dollars, just $18
less than in 2009. The data come from annual Statistics
of Income tables that were updated Wednesday.
The average tax rate was 11.4 percent, up from 10.5
percent in 2007, the Internal Revenue Service data
No income tax was paid by 1,470 of the 235,413
taxpayers earning $1 million or more in 2009,
compared with the 959 taxpayers with million-
dollar-plus incomes who paid no income taxes
Total adjusted gross income reported on tax returns,
measured in 2009 dollars, was $7.626 trillion, down
from $8.233 trillion in 2008 and $8.989 trillion in 2007.
Total adjusted gross income was up only slightly from
the $7.475 trillion reported in 2001, when there were
10 million fewer taxpayers. Adjusted gross income is
the amount on the last line of the front page of a
Form 1040 tax return.
The data from tax returns showed a startling drop in
the total number of taxpayers reporting any wages.
A taxpayer, as defined by the IRS, can be an individual
or a married couple. The data showed almost 4.2
million fewer taxpayers reported wages in 2009 than
in 2007, with about 116.7 million taxpayers reporting
wages and salaries in 2009 -- down from about
120.8 million in 2007.
Average wages fell, too, sliding $1,106 to $48,917
from $50,023 in 2007.
FEWER TAX RETURNS
The number of tax returns filed fell to 140.5 million,
down almost 2 million compared with 2007, as millions
of Americans went from working to having no earned
income or so little that they did not have to file a
The number of Americans reporting incomes of
$10 million or more also plunged even more than
the steep drop in income for the population as a whole.
Just 8,274 taxpayers reported income of $10 million
or more in 2009, down 55 percent from 18,394 in 2007.
Compared with 2007, total real income of these top
earners in 2009 fell 58.6 percent to $240.1 billion,
but average income slipped just 8.1 percent
to $29 million.
While the number of people who earned enough
income to file a tax return fell, the share of those
filing who paid no income tax rose to 41.7 percent
of tax returns in 2009, up from 36.4 percent in 2008.
The average income of those filing but paying no
tax was $14,483.
The share of households filing a tax return but
paying no income tax results from two key factors:
* One is the drop in incomes because a married
couple does not pay income tax until they make
at least $18,300, and families with two children
pay no income tax until they make more than
$40,000 under policies started in 1997 and
since expanded at the behest of Congressional
Republicans, many of whom complain that too
many households do not pay income taxes.
* The second reason was that in 2009, nearly
all working taxpayers received the temporary
Making Work Pay Tax Credit sponsored by
President Obama, which saved as much as
$400 ($800 for married couples) in federal
income taxes in 2009. The credit continued
in 2010, but then ended.