Oct. 25 (Bloomberg) -- As the recession pushed U.S. incomes down last year, America’s highest earners -- 74 people who made more than $50 million -- saw their pay more than quintuple on average to a record $519 million each. Those top-end Americans earned a combined $38.4 billion in 2009, up from $11.9 billion earned by 131 individuals with wages above $50 million in 2008, according to Social Security Administration data. Nationally, the average annual wage fell by $384 to $39,269 and the median wage fell by $253 to $26,261 during the worst economic slump since the Great Depression.
The Social Security Administration statistics, released Oct. 15, come as Congress faces a debate after the Nov. 2 elections over whether to extend Bush-era tax cuts for all or some Americans. Tax cuts are set to expire Dec. 31.
The government figures were first reported today by David Cay Johnston, a columnist on www.tax.com, a Website sponsored by Tax Analysts, a nonprofit tax information organization based in Falls Church, Virginia.
The data reveal a pattern of income changes that is consistent with other studies, such as an income-tax data study by economist Emmanuel Saez of the University of California, Berkeley, that showed top income earners sustained a less- damaging shock in this recession than other downturns.
Tax Cut Debate
The Obama administration has emphasized growing income inequality to make its case for ending tax cuts, enacted in 2001 and 2003, for couples earning over $250,000. It has advocated keeping lower tax rates for household earning less than that. Republicans have countered that any tax increase will stifle entrepreneurship and job creation.
Democrats delayed a vote on extending the tax cuts until after the elections. Republicans are favored to make large gains and possibly win control of one or both chambers of Congress.
The Social Security data didn’t offer details on the 74 top earners. Johnston, a former New York Times reporter who won the Pulitzer Prize in 2001 for exposing inequities in the tax code, said in a phone interview that those income earners were most likely Wall Street traders who earned bonuses or corporate executives cashing in deferred compensation that accumulated over the years, or even highly paid athletes.
35 Percent Rate
The 74 people who earned more than $50 million pay a 35 percent marginal rate, plus a 2.9 Medicare tax. Higher income and Medicare tax rates scheduled to take effect over the next few years would cost someone who earned the $519 million average about $36 million in additional taxes by 2013.
According to the Tax Foundation, the top 1 percent of households, those with adjusted gross incomes above $380,354, paid 38 percent of all federal income taxes in 2008. The bottom 95 percent, those with adjusted gross incomes below $159,619, paid 41.3 percent.
The figures count only income subject to Medicare taxes, such as wages and tips. Income from investments isn’t counted.
Since 1997, the first year in which the Social Security Administration began tracking wages of by people earning more than $50 million, the average pay for that category has exceeded $100 million only once, in 2000, when 91 people averaged $111.6 million.
Overall, the Social Security Administration said 150.9 million Americans reported wages in 2009, down 4.5 million from the year before. Unemployment has hovered close to 10 percent for more than a year.
