Why do some people make a lot of money?
- by admin
Some people, like Stephen A. Smith, earn a lot more than others, but a new report shows the average person in America makes $120,000 a year.
That number includes $40,000 to $60,000 for those making less than $100,000.
There are a lot people making a lot.
The report also says people in the top 20 percent of earners make $8.2 million.
The top 20 to 30 percent make $16 million to $25 million.
The survey from the nonpartisan Tax Policy Center says the top 1 percent of households, or households making more than $1 million a year, pay a whopping $3.2 trillion in taxes.
That’s more than all the income taxes paid by Americans combined.
The Tax Policy report, based on data from the U.S. Census Bureau, does not include the federal estate tax, which could be a big reason for this trend.
It also does not take into account federal income tax, or the payroll tax, the part of the tax code that many people don’t pay.
So what do the experts think about this?
The Tax Institute’s Lynn Francoise told the AP the numbers aren’t necessarily good news for a number of reasons.
One, a lot depends on the person.
That $120 million is not the total amount of taxes paid in the United States.
For example, it doesn’t include the value of deductions, credits and other items, like child care, that many households itemize on their taxes.
In other words, it’s not the full tax bill, but just a snapshot of how much tax is paid in each category, said Roberton Williams, the Tax Institute senior fellow.
“The average person makes $10,000 more a year than the median household in the country,” Williams said.
“So the average income level for the median is $100 million, but for those households that are the top income earners, the average is $120.5 million.
So if the top 10 percent of Americans pay 25 percent of all federal taxes, the top 5 percent of incomes pay more than 25 percent.”
Williams also noted that the average amount of money Americans make is much more volatile than the average wage.
In other words — it’s more likely to fluctuate with changes in the stock market, unemployment or inflation.
The other factor is that many Americans are still in debt, Williams said, meaning they’re taking on debt that may not be sustainable over time.
“So if the stock price of the company goes down, the debt burden becomes more of an issue,” Williams added.
But the biggest reason people don’s make as much as they do, he said, is the sheer volume of financial transactions.
“If you have people in a situation where they’re paying a lot and they’re making a large amount of debt and they don’t have any assets, they’re essentially taking on this financial burden,” Williams explained.
“And it creates the demand for a lot.”
Some people, like Stephen A. Smith, earn a lot more than others, but a new report shows the average person…