Sources of Personal Income

Sixty-eight percent of total income reported on individual income tax returns in 2012 is in wages and salaries, and about 83 percent of all tax filers report wage income. In order to substantially increase revenues, policymakers have to look to labor compensation as the main tax base simply because of its scale. Pensions and retirement accounts make up a substantial portion of capital income. The middle-class, in fact, has a colossal equity stake in American capital through such accounts. Business income is also a large feature of the individual tax code, as some businesses file their taxes through the individual tax code. Finally, capital gains and dividends accounted for about $883 billion in income in 2012.

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