Who is paying the highest amount of our Federal Income Taxes?
Does it matter? Certainly yes, with the Presidential election only a few months away, which just became even more interesting. Both parties have very opposite ideas of who and how much tax should be paid.
The latest data available is from 2021 per IRS statistics. The top 1% of individual filers paid 45.78% of all US federal income taxes. The same top 1% reported 26.3% of total adjusted gross income. To put it in another way, the top 1% earned approximately 26.3% of income in the US and paid 45.78% of taxes. To be part of the 1% in 2021, your Adjusted Gross Income needed to be at least $682,577.
The highest 5% paid 65.64% of total tax. Income for the top 5% started at $252,840.
The top 10%, paid 75.81% of the tax burden, adjusted gross income levels starting at $169,800.
The bottom 50% of filers paid 2.34% of the total Federal Income Tax.
The results of the next election (President, House, Senate) will be impactful to all of us going forward.
Social Security On-line Access
The Social Security administration announced customers who created an on-line account before September 18, 2021, will soon be required change to a “Login.gov” account to continue access to on-line services. Changes are being made to align with federal authentication standards while providing safe and secure access to online services.
Suggestion is to immediately sign on as normal. Upon doing so, you will be presented with an option to transition to Login.gov. I suggest doing this sooner than later.
Markets/Economy
A challenging week for the markets as the Dow and the Small Cap Russell 2000 rose .7% and 1.87%, respectively. Technology took it on the chin, pushing the Nasdaq down (3.66%) and the S&P 500 (1.82%).
Foreign stocks dropped (2.42%) and emerging market stocks (3.83%).
Bond yields continue to look for direction, rose slightly with the 10-year US Treasury yield ending last week @ 4.242%.
Last week, we witnessed Retail sales being reported flattish with restaurant and other discretionary spending decelerating. This is a must to keep our thumbs on the pulse.
The upcoming combination of economic data and corporate earnings report will be more meaningful by the month.
This week we will hear the 1st reading of our 2nd quarter Gross Domestic Product (GDP) and the Fed’s favorite inflation gauge, the Personal Spending Expenditures (PCE) Index.
Most investors believe the economy is truly slowing. If that is true, the next logical question, how much will the economy slow going further. Keep in mind we went from zero percent interest rates to over 5%. Mortgages, car loans, etc., obviously cost much more today than a few years back.
Chairperson Powell certainly has his hands full. Balancing a potentially slowing economy with concerns of resurgent inflation is not a job I would desire.
On the corporate earnings front, we’ll hear approximately 20% of S&P 500 companies and 30% next week. Well known names reporting this week include, Verizon, Visa, Tesla, Alphabet, GM, UPS, Chipotle, Ford, American Airlines, Honeywell International and more.
Please feel free to share our weekly retirement blog with friends, family, and colleagues. Our feedback from the blog, it offers a quick and informative summary of the markets/economy and keeps one updated on other changes that relate to financial planning and retirement.
