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Average U.S. Income Showed First Rise Over 2000, latest Tax Data show.

Posted on August 28, 2008
Filed Under News | 1 Comment

Average U.S. Income Showed First Rise Over 2000
By DAVID CAY JOHNSTON, The New York Times
Published: August 25, 2008
Americans enjoyed higher average income in 2006 for the first time since 2000, when the last economic expansion ended, the latest tax data show.


Adjusted gross income reported on tax returns in 2006 averaged $58,029. In 2006 dollars that was an increase of $739, or 1.2 percent, from the $57,289 average in 2000, analysis of Internal Revenue Service data showed.

Total income increased by $619.2 billion or 8.3 percent, all of which went to those making more than $75,000, and 42 percent of which went to the roughly one in 400 taxpayers who made more than $1 million in 2006.

Average income fell sharply in 2001 and in 2002, when it dropped to $51,870, off nearly 10 percent from 2000, tax data show. The average grew slightly in 2003.

Average income grew significantly in 2004, rising $2,291, and again in 2005, when the average increased by $2,210. Income growth continued in 2006, but at a much slower pace, increasing by $1,369 over the 2005 average once inflation is taken into account.

Salaries and wages, by far the largest source of income, nearly returned to the 2000 average in 2006. However, among the highest-paid workers, both total and average wages fell, an indication of how the Internet bubble had concentrated gains among a relatively few workers.

The average wage in 2006 was $46,996, down $101, or a fraction of 1 percent, from $47,097 in 2000. Average wages in this decade hit a low of $45,956 in 2003, the I.R.S. data show.

Among workers with salaries of less than $1 million, the average wage in 2006 was up $170 from 2000.

However, salaries fell noticeably among the tiny slice of taxpayers whose total income was $1 million or more, a threshold that the I.R.S. does not adjust for inflation. The number of wage earners in this high-income group soared over six years, up 42.9 percent, to 285,759 of the 116.4 million taxpayers reporting wages in 2006.

Despite this rise in the number of high-wage earners, their total wages declined by $2.4 billion, or almost 1 percent, to $313.3 billion.

The decline in total wages at the top was solely among the narrow segment of wage earners with total income of $5 million or more, the same group that was the big winner from dot-com era stock options, reported as wages on tax returns. The average wage of these 33,309 workers fell almost 37 percent, to $3.5 million in 2006 from $5.5 million in 2000, analysis of the tax data showed.

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