If you are making $250+K, its very likely your income is very steady.
False, people move in to that level and out again all the time.
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"The composition of the very top income groups changed dramatically over time. Less than half (39 percent or 42 percent depending on the measure) of those in the top 1 percent in 1996 were still in the top 1 percent in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remained in that group in 2005. "
entrepreneur.com
The IRS data also shows increases in individual incomes across all income groups (see Table 3). Just as the highest earners lost the largest percentage of their incomes during the recession of 2001, so they have prospered the most as the economy continued to rebound through 2006. For example, from 2000 to 2002, the AGI of the top 1 percent of tax returns fell by over 26 percent. In that same period, the AGI of the bottom 50 percent of tax returns actually increased by 4.3 percent. However, since 2002, as the recession has ended, AGI has more than doubled for the top 1 percent (an average of over 20 percent per year), while the bottom 50 percent of returns have seen an aggregate increase of AGI since 2002 of 24 percent.
In sum, between 2000 and 2007, pre-tax income for the top 1 percent of tax returns grew by 50 percent, while pre-tax income for the bottom 50 percent increased by 29 percent. All figures are nominal (not adjusted for inflation).
This pattern of income loss and growth at the top of the income spectrum is the same during almost every recession and recovery. The net result has also been a sharp rise in federal government tax revenue from 2003 to 2007 compared to previous years. And we should expect the same to have occurred from 2007 through 2009-2010 when the economy will have suffered what is likely the worst recession since the early 1980s.
taxfoundation.org
"What is the truth about income mobility? The facts, both those the reporters cited and those they didn’t, show that income mobility in the United States is high. Consider data that Wessel cites from a study of wages for American men born between 1963 and 1968. The study, by Bhashkar Mazunder, an economist at the Federal Reserve Bank of Chicago, shows that 32 percent of men whose fathers were in the bottom 25 percent of earners were themselves in the top half and that 34 percent of men whose fathers were in the top 25 percent were themselves in the bottom half. Mazunder also found that 14 percent of men whose fathers were in the bottom 10 percent of the wage scale made it to the top 30 percent and that 17 percent of men whose fathers were in the top 10 percent dropped down to the bottom 30 percent. Wessel made sure to put the word only in front of these percentages, presumably to persuade the reader that this is not much mobility, but it seems high."
hoover.org
"More than half (58.5 percent = 100 41.5) of the top 1 percent of taxpayers in 1996 had dropped to a lower income group by 2005, although most (87.8 percent) remained in the top income quintile. This statistic illustrates that the top income groups as measured by a single year of income (i.e., cross-sectional analysis) often include a large share of individuals or households whose income is only temporarily high. Put differently, more than half of the households in the top I percent in 2005 were not there nine years earlier. Thus, while the share of income of the top I percent is higher than in prior years, it is not a fixed group of households receiving this larger share of income every year. As suggested by the Schumpeter hotel analogy, the majority of the most luxurious rooms are occupied by different people at different times. "
entrepreneur.com
"Mr. X, like me, earned a Ph.D. in economics. In 1985, at age 36, he decided to leave academia and set up a full-time business with his wife. They ran the business out of their house in a major American city. Here are their income ranges for the last 25 years:
. In 15 of the 25 years, their income was < $100K.
. In 10 of those 15 years in which their income was <$100K, it was also < $50K
. In 2 of those 10 years, their income was $0.
. In 5 or 6 of those years, their income was > $500K.
. In 1 of those 5 or 6 years, their income was just over $900K.
All of their 5 or 6 high-income years were years in which their marginal tax rate was 39.6% or 35%. In other words, in none of their high-income years were they in the Reagan 28% or the Bush I 31% top tax bracket. And, of course, in those years, various of their deductions didn't count because they are phased out as income rises.
To make this income, they work 6 to 7 days a week for 10 to 12 hours a day. When I visit X, which I do once a year, he takes a few hours out of his day to go for walks or go out on his boat. He leaves his phone on and often deals with employees or clients.
Because they work so hard, some of the things the rest of us do and don't hire people for, like gardening, minor repairs to the house, etc., are things they hire people for. These payments are largely non-deductible from their taxable income.
Because they own their own business, their business's payments for their own family health insurance count as taxable income to them.
They still expect much upside on income because the business has finally become successful, but a huge percent of this upside will be taxed at 39.6% or more from 2011 on. The idea that the government is taking it from those "who did so well in the 1980s and 1990s" does not apply to them."
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