Fisher Island, Florida is home to a dense collection of yachts and millionaires.
Where do this country’s most prosperous citizens hang out? How much money do they have? President Obama wants them to pay a bit more in taxes. But how much are they coughing up now?
Answers to these questions can be extracted from a little-utilized IRS database of income tax statistics. The file sorts tax returns by income range and by zip code.
Wary of releasing any data that might reveal something about individual taxpayers, the IRS slices its statistics into broad ranges. In this data set the top tier of income is $200,000 and up. Except, perhaps, to a politician looking for revenue increases, this scarcely qualifies a taxpayer as wealthy.
So I put a finer sieve on the database, zeroing in on communities where the average income within the 200K-and-up set is at least $1 million.
Result: a set of 130,400 tax returns from 64 hot spots of prosperity–suburbs, islands, parts of cities. The list of ritzy places ranges from Fisher Island, an enclave of yacht owners off Miami, to the Tribeca area of Manhattan, where wage slaves with seven-figure salaries have their chic loft apartments.
Your tax return is in this data set if you make at least $200,000 and you have a lot of millionaires as neighbors.
Ranked by income, the list of rich places starts with Fisher Island, at $3.2 million per high-bracket taxpayer. Then come Purchase, N.Y. at $2.2 million; two more New York City suburbs, New Vernon and Alpine, N.J., both at $2.1 million, and Atherton, Calif. at $1.9 million.
I did something more with the data that the IRS doesn’t do: estimate net worths, using figures on dividend, interest and business income as starting points.
In estimated net worth, the richest five communities are: Fisher Island, at $57 million per high-bracket return; Alpine, at $28 million; Medina, at $26 million; Palm Beach, Fla., at $23 million, and the King’s Point/Great Neck area on Long Island, at $22 million.
The recent stock market swoon did some damage to net worths, but not as much as you might think. The moneyed set in this country hold a lot of bonds, too, and bonds have done well this year.
Most of the millionaire hangouts are in California, Florida and the vicinity of New York City, but there are a few in Illinois and Texas.
The taxpayers in my data set pay no small amount to the government, despite all their tax avoidance schemes. The federal tax take from this club is $41 billion, or a fourth of their $164 billion in income. That 25% rate is almost double the rate for the average American paying at least some federal income tax. (And of course a lot of people don’t pay income tax.)
So, Warren Buffett isn’t quite right in implying, by citing his own and his secretary’s taxes, that rich people enjoy lower tax rates than ordinary people. But it’s also clear from the data that the wealthy could chip in more to the U.S. Treasury without cutting too deeply into either their incomes or their bank accounts. Combined net worth of the moneyed crowd: $1.6 trillion.
Within this group of 64 rich communities there’s a big range in tax burdens. In five of them, high-bracket taxpayers can cover all their tax bills—state, local and federal income taxes plus real estate taxes—with a fourth of the money coming in.
Medina, Wash., where Bill Gates has a nice home, is one of the five wealthy communities where high-bracket taxpayers cough up no more than 25% of income to all levels of government. The other four are Florida spots where the respectable houses come with boat slips: Fisher Island, Key Largo, Boca Grande and Longboat Key.
At the other end of the tax spectrum are the rich folk in Bel Air, Calif. and Short Hills, N.J. Their tax bills consume 45% or more of income.
There’s a big range, too, in charitable impulses. The big givers live in Medina, Longboat Key and the horse country around Charlottesville, Va. Wealthy families in these three places put aside 5% or more of their income for philanthropy.
The cheapskates are concentrated in two places: New York City and its suburbs and downtown Miami.
The stingiest NYC suburbs tend to be found across the Hudson River. The high-income residents of all four New Jersey towns on the roster give away 2% or less of income. That’s noteworthy because average Joes are at the 2.9% level: That’s the percent of income given away by the 40 million taxpayers whose donation levels are known because they itemize deductions.
New Jersey’s skinflint towns: Rumson, Alpine, Short Hills and New Vernon. The cheap club also includes two places in New York: Tribeca and a portion of White Plains.
Where do the rich get their income? Just under half of the money coming in is from working: salaries, pensions, Social Security, IRA payouts. The upper-bracket folk in the 64 rich hot spots take in 52% of their income from property: stocks, bonds, real estate, oil wells and businesses.
For the average American taxpayer, property income is only 17% of the pie.
The fraction of income from property peaks at 85% for Fisher Island. Property accounts for 75% or more of income in two other Florida communities, Boca Raton and Key Largo, and in Charlottesville. It hits bottom in fast-paced New York. Tribecans get only 25% of their income from investments.
Tribeca, in other words, is for up-and-comers. Fisher Island is for people who made it a long time ago and are sitting on fat brokerage accounts.
Residences on Fisher consist for the most part of ritzy condos with very stiff maintenance fees. You can’t get on the island except by boat. Mel Gibson and Oprah Winfrey have had places there.
|Highest Net Worth|
|Average for filers with at least $200,000 of AGI|
|Kings Point/Great Neck||NY||21.8|
|Preston Hollow, Dallas||TX||20.9|
|Bay Harbor Islands, Miami||FLA||16.6|
|Sutton Place, Manhattan||NY||16.5|
|Average AGI for returns with at least $200,000|
|River Oaks, Houston||TX||1,546,000|
|Preston Hollow, Dallas||TX||1,535,000|
|Kings Point/Great Neck||NY||1,347,000|
|Charitable donations as a fraction of AGI|
|Bel Air, Los Angeles||CA||4.8|