Who are the 1% and How do they unfairly not pay taxes?

Honestly I was just curious how the 1% pay taxes.  We hear a lot about how the 1% pay all or most of their income at the 15% Capital Gains rate, and that they use all of the loop holes to hide their income.  I was sure the IRS had some data to graph and analyze.  I was right.

Unfortunately, the IRS doesn't provide the 99% and 1% breakdown.  They do provide data on taxes generated at the various rates: Returns with Modified Taxable Income: Tax Generated.  I'm not going to accuse the IRS of being intentionally obstructive, but this table doesn't include the Adjusted Gross Income (AGI) for each income grouping so I had to us this table to get AGI.

The really rich, the top 400 are also tracked by the IRS.  I included one chart of the 2008 Top 400.  The information is not broken down by rate, but they do show how much income is taxed at the 15% Capital Gains and Qualified Dividend rate.

Here are some pie charts showing the breakdown for who are more or less the 1%.

There are two items associated with each slice: The tax bracket and the percentage of that groups income paid under that tax rate.  Also included are the number of returns for that income grouping and the ratio of taxable income to AGI.  That ratio is a good indicator of how many "loop holes" an income group can find. I tried to keep the colors consistent between charts.

By the time we get down to the $200,000 to $500,000 group most of their income is taxed lower than the top marginal rate (currently 35%), and very little (<5%) is on long term capital gains.  Households making over $500,000 reduce their AGI by 13-15%.  We could Eliminate all of those "loop holes" and run the government for a few days.  That being said, the problem with the "loop holes" is that some people reduce their AGI by 5% and some by 20%, which results in drastically different effective tax rates for people making the exact same income.

There is another group that really takes advantage of these loop holes the 96.2%.  Yes these evil bastards (both writers and almost everyone reading this blog are included in this group) use these "loop holes" and "accounting gimmicks" to lower their tax rate and not pay their fair share.

No one is going to accuse this group of hiring lobbyists to put these deductions in the tax code.  CONGRESS does this.  They like to hand out other people's money to buy votes and the 96.2% account for a lot of votes.

Treating capital gains that result from assets being held for 366 days differently than ones held for 364 days is stupid.  That's my only real gripe with Perry's 20% flat tax ... He want's to tax all capital gains at 0.00% (also stupid)  The government uses deductions to lower the income tax burden, but this treats people unequally.  Wouldn't it just be better to treat all sources of income identically,  have lower rates, a personal exemption, and NO deductions.