Who Pays Capital Gains Taxes?

With all the persistent talk in Washington about cutting taxes even further on profits from selling stocks and bonds, it might be useful to point out who pays those "capital gains taxes" under current law. The attached table provides details. A few items stand out:

• Just over two-thirds of American taxpayers make less than $50,000 a year. Their average federal income tax in 1999 will come to $1,045. Of that, only $12--or 1.2%--represents taxes on capital gains.
• Just over a fifth of all taxpayers make between $50,000 and $100,000. Their average income tax on capital gains is $179--which is only 2.3% of their total federal income tax.
• In contrast, 2% of all taxpayers make more than $200,000 a year. The average income tax paid on capital gains by this top-income group is $20,675. Overall, taxpayers making more than $200,000 now pay more than three-quarters of all income taxes paid on capital gains.

Who Pays Capital Gains Taxes? Federal Income Taxes on Capital Gains Under Current Law in 1999
Income (in thousands)	% of Taxpayers	Average Income	CG Tax/ Total Income Tax	Average Tax on Capital Gains	% of All Cap Gains Taxes	Average Income Tax	% of Total Income Tax
<$10	12.2%	$ 6,600	—	$ —	—	$ –267	–0.5%
$10-20	20.0%	14,900	nm	2	0.1%	–104	–0.3%
$20-30	16.7%	25,000	0.8%	8	0.2%	984	2.7%
$30-40	11.5%	34,500	0.9%	20	0.4%	2,225	4.2%
$40-50	9.2%	44,800	1.3%	52	0.9%	3,921	5.9%
$50-75	14.6%	61,300	2.0%	126	3.4%	6,387	15.2%
$75-100	7.1%	85,800	2.6%	288	3.8%	10,901	12.6%
$100-200	6.0%	132,500	6.1%	1,248	13.9%	20,410	20.2%
$200+	2.0%	525,400	17.1%	20,675	77.3%	120,939	40.1%
ALL	100.0%	$ 49,600	8.9%	$ 541	100.0%	$ 6,108	100.0%
ADDENDA:
<$50	69.6%	$ 23,000	1.2%	$ 12	1.6%	$ 1,045	11.9%
$50-100	21.7%	69,300	2.3%	179	7.2%	7,863	27.9%
Notes: Lowest income group excludes returns with negative incomes. "nm" = not meaningful, because average current personal income tax, after credits, is less than zero.
Source: Institute on Taxation & Economic Policy Microsimulation Tax Model. Citizens for Tax Justice, June 26, 1998.

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