Million-Dollar Earners Making A Comeback, Tax Returns Show

The Tax Foundation has a fascinating new post looking at the latest IRS data on "millionaires," by which it means taxpayers who report more than $1 million in annual income.

The number of million-dollar earners fell 40 percent in the financial industry meltdown and Great Recession of 2007-2009 before making a comeback in 2010, the most recent year available.

In 2010 about 268,000 taxpayers reported adjusted gross income of $1 million or more, up from 237,000 in 2009, which was a six-year low.

Of course millionaires represent just a tiny fraction of the nation's 143 million taxpayers -- just a small sliver of the top 1 percent. (It's about the top 0.2 percent.)

And while millionaires are making a comeback, the picture has been less promising for the vast millions of the middle class. A census report last fall showed that the nation's median income was $49,445 in 2010, a decline of 2.3 percent from 2009 when adjusted for inflation.

The Tax Foundation report shows that the nation's wealthiest earners typically share a few traits: They are older, well educated and tend to have more than one income in the household.

For example 86 percent of "millionaire" tax returns were filed by married couples, compared with only 40 percent of all tax returns. (The vast majority of tax returns are filed as single individuals or heads of household.)

Nearly half of all millionaire filers were 55 and older.

The Tax Foundation also points out that millionaire status can be fleeting. Of the 675,000 taxpayers who earned over $1 million for at least one year in the past decade, only 6 percent maintained that status for all nine years. Half broke the $1 million barrier in just one tax year, and another 15 percent broke the barrier twice.

Folks at the Tax Foundation, who are also behind the annual "Tax Freedom Day," figure that the average effective tax rate on million-dollar earners has remained "fairly high throughout the period." The effective federal tax rate on these high earners fell from 29 percent in 2003 to 23 percent in 2007 before rising again to 25 percent as of 2010.

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