Did you pay your Fair Share?

2014 Budget of the federal government

From Office of Management and Budget

$3.506,000,000,000 (3.5 trillion) (actual)[5]

2014 Gross Personal income in the United States

 14,740,000,000,000 (14.7 trillion) (actual)

2014 Amount of Actual Government Expenditures for each dollar of Gross Personal Income: 3,506,000,000,000/14,740,000,000,000=$0.24 (24 Cents)

Fair Share = Gross Personal Income X 0.24:

Income = $100,000,000 Fair share = $24,000,000

Income = $1,000,000     Fair Share = $2,400,000

Income = $100,000        Fair Share = $24,000

Income = $50,000          Fair Share = $12,000

Income = $25,000          Fair Share = $6,000

The clintons gross income for 2015 was $10.6 million. They paid about $3.6 million in federal taxes for an effective tax rate of about 35 percent ($0.35 for each Dollar of gross income.)

 Personal income in the United States from 1990 to 2014 (in billion U.S. dollars)

This statistic shows the total personal income in the United States from 1990 to 2014. The data are in current U.S. dollars not adjusted for inflation or deflation. According to the BEA, personal income is the income that is received by persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance. Personal income increased to about 14.74 trillion U.S. dollars in 2014.

The term “income” is not defined in the statute or regulations. An early Supreme Court case stated, “Income may be defined as the gain derived from capital, from labor, or from both combined, provided it is understood to include profit gained through a sale or conversion of capital assets.”[4] The Court also held that the amount of gross income on disposition of property is the proceeds less the basis (usually, the acquisition cost) of the property.[5]

Personal income in the United States has risen steadily over the last decades from 4.9 trillion U.S. dollars in 1990 to 14.7 trillion U.S. dollars in 2014. 

Personal income includes all earnings including wages, investments, and other sources. Personal income also varied widely across the U.S., where those living in the District of Columbia, on the higher scale, earned an average of 74,513 U.S. dollars per capita and on the lower end of the spectrum, people in Mississippi earned 34,478 U.S. dollars per capita. In the District of Columbia, disposable income averaged some 64,892 U.S. dollars. In total, California earned the most personal income followed by Texas, receiving 1.82 trillion U.S. dollars and 1.2 trillion U.S. dollars, respectively. 

Income tends to vary widely between demographics in the United States. Those with higher education levels tend to earn more money. Among those who were severely disabled, 37.3 percent garnered a personal income between 5,000 to 14,999 U.S. dollars. The and Supplemental Security Income disability programs provide monetary benefits to the disabled and certain family members.

Following are some of the things that are included in income:

  • Wages, fees for services, tips, and similar income. It is well established that income from personal services must be included in the gross income of the person who performs the services. Mere assignment of the income does not shift the liability for the tax.[7]
  • Interest received,[8] as well as imputed interest on below market and gift loans.[9]
  • Dividends, including capital gain distributions, from corporations.[10]
  • Gross profit from sale of inventory. The sales price, net of discounts, less cost of goods sold is included in income.[11]
  • Gains on disposition of other property. Gain is measured as the excess of proceeds over the taxpayer’s adjusted basis in the property.[12] Losses from property may be allowed as tax deductions.[13]
  • Rents and royalties from use of tangible or intangible property.[14] The full amount of rent or royalty is included in income, and expenses incurred to produce this income may be allowed as tax deductions.[15]
  • Alimony and separate maintenance payments.[16]
  • Pensions,[17] annuities,[18] and income from life insurance or endowment contracts.[19]
  • Distributive share of partnership income[20] or pro rata share of income of an S corporation.[21]
  • State and local income tax refunds, to the extent previously deducted. Note that these are generally excluded from gross income for state and local income tax purposes.
  • Any other income from whatever source. Even income from crimes is taxable andmust be reported, as failure to do so is a crime in itself.[22]

Gifts and inheritances are not considered income to the recipient under U.S. .[23]However, gift or estate tax may be imposed on the donor or the estate of the decedent. 

Gross income is not limited to cash received. “It includes income realized in any form, whether money, property, or services.” . The courts have rejected arguments by various tax protesters who have argued that some types of income are not included in this broad definition. Where property or services are received in exchange for property, use of property, services, or use of money, the fair market value of the property or services received is included in gross income. For examples, see, e.g., Rev. Rul. 79-24, 1979 1 C.B. 60.)

For a cash method taxpayer, the measure of income is generally the amount of money or fair market value of property received. For an accrual method taxpayer, it includes the amount the taxpayer has a right to receive.[24]

Certain specific rules apply, including:

  • Constructive receipt,
  • Deferral of income from advance payment for goods or services (with exceptions),
  • Determination what portion of an annuity is income and what portion is return of capital,

The value of goods or services received is included in income in barter transactions.

The courts have given very broad meaning to the phrase “all income from whatever source derived,” interpreting it to include all income unless a specific exclusion applies.[25] Certain types of income are specifically excluded from gross income. These may be referred to as exempt income, exclusions, or tax exemptions. Among the more common excluded items[26] are the following:

  • Tax exempt interest. For Federal income tax, interest on state and municipal bonds is excluded from gross income.[27] Some states provide an exemption from state income tax for certain bond interest.
  • Some Social Security benefits. The amount exempt has varied by year. The exemption is phased out for individuals with gross income above certain amounts.[28]
  • Gifts and inheritances.[29] However, a “gift” from an employer to an employee is considered compensation, and is generally included in gross income.
  • Life insurance proceeds received by reason of the death of the insured person.[30]
  • Certain compensation for personal physical injury or physical sickness, including:
    • Amounts received under worker’s compensation acts for personal physical injuries or physical sickness,
    • Amounts received as damages (other than punitive damages) in a suit or settlement for personal physical injuries or physical sickness,
    • Amounts received through insurance for personal physical injuries or physical sickness, and
    • Amounts received as a pension, annuity, or similar allowance for personal physical injuries or physical sickness resulting from active service in the armed forces.[31]
  • Scholarships. Amounts in the nature of compensation, such as for teaching, are included in gross income.[32]
  • Certain employee benefits. Non-taxable benefits include group health insurance, group life insurance for policies up to $50,000, and certain fringe benefits, including those under a flexible spending or cafeteria plan.[33]
  • Certain elective deferrals of salary (contributions to “401(k)” plans).
  • Meals and lodging provided to employees on employer premises for the convenience of the employer.[34]
  • Foreign earned income exclusion for U.S. citizens or residents for income earned outside the U.S. when the individual met qualifying tests.[35]
  • Income from discharge of indebtedness for insolvent taxpayers or in certain other cases.[36]
  • Contributions to capital received by a corporation.[37]
  • Gain up to $250,000 ($500,000 on a married joint tax return) on the sale of a personal residence.[38]

There are numerous other specific exclusions. Restrictions and specific definitions apply.

Some state rules provide for different inclusions and exclusions.[39]

United States persons (including citizens, residents (whether U.S. citizens or aliens residing in the United States), and U.S. corporations) are generally subject to U.S. federal income tax on their worldwide income. Nonresident aliens are subject to U.S. federal income tax only on income from a U.S. business and certain income from United States sources. Source of income is determined based on the type of income. The source of compensation income is the place where the services giving rise to the income were performed. The source of certain income, such as dividends and interest, is based on location of the residence of the payor. The source of income from property is based on the location where the property is used. Significant additional rules apply.[40]