Top earners saw 2008 income drop

Republicans have said tax increases are off the table. President Obama and other Democrats have said they want to allow the Bush-era tax cuts to expire for income above $200,000 for individuals and $250,000 for households at the end of next year. The current rates were extended after leaders in the two parties hashed out a compromise at the end of 2010. 

Some Democrats have also looked at policies geared solely toward those making more than $1 million a year, with a Senate aide telling The Hill that a draft of that chamber's 2012 budget included a surtax on income above that level.

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Other takeaways from the IRS release:

— Even with the steep fall, the 2008 top earners still made close to six times as much as their 1992 brethren. When accounting for inflation, it’s almost four times as much.

— The top 400’s adjusted gross income dropped to 1.31 percent of total income, from 1.59 percent a year earlier. But the 2008 figure was still quite a bit higher than it had been in the not-so-distant past: Between 1992 and 2003, the top 400 had more than 1 percent of total income only once.

— In 2008, high earners also accounted for a slightly smaller share of total income tax: 1.9 percent, compared to 2.05 percent in 2007. The top 400’s average tax rate did rise, to 18.1 percent from 16.6 percent. But that figure is still far below what it had been before the Bush tax cuts were enacted, with average tax rates for the richest reaching 29.4 percent in 1993.

— The composition of the top 400’s earnings also changed radically in the 15 years or so preceding 2008. In 1992, salaries accounted for 26 percent of income, with capital gains taking up 36 percent. By 2008, salary had dropped to just over 8 percent, while capital gains had jumped to close to 57 percent.