IRS data show that the vast majority of taxpayers in the ‘Fortunate 400′ are only there for one year

From Mark Perry.

"Frequency of Appearing in the Top 400 Tax Returns by Adjusted Gross Income, Tax Years 1992–2010

Number of Years in the Top 400	Number of Taxpayers in Group	Percent of Taxpayers Represented by Each Group
1	2,909	72.3%
2	504	12.5%
3	175	4.3%
4	126	3.1%
5	70	1.7%
6	55	1.4%
7	41	1.0%
8	25	0.62%
9	24	0.59%
10 or more	95	2.40%
Total	4,024	100%

The IRS just released a new report on the 400 taxpayers reporting the highest adjusted gross incomes (AGI) from 1992 to 2010, and the table above shows the frequency of individual taxpayers appearing in the “Fortunate 400″ (Table 4 in the IRS report). Of the 7,600 tax returns filed from 1992 to 2010 (400 highest earners in each year x 19 years), there were 4,024 unique, individual taxpayers, since obviously some taxpayers made it into the top 400 earner group in more than one year. The data show that:

1. Of the group of 4,024 top earners from 1992-2010, there were 2,909 individual taxpayers who made it into the “Fortunate 400″ only one time during the 19-year period. Those 2,909 one-timers represent 72.3% of the total 4,024 taxpayers, and therefore only 1,115 taxpayers that make up the rest of the group (27.7% of the total, or about one in four) were able to make it into the top 400 more than once between 1992 and 2010.
2. Moreover, since 2,909 earners made it into the top 400 once (72.3%), and another 504 (12.5%) made it into the top group twice between 1992 and 2010, that means that approximately 85% of the top earners made it into the “Fortunate 400″ group only once or twice (3,413 out of 4,024), and only about 15% of the remainder (611 taxpayers out of 4,024) were able to make it into the top group in more than 2 years out of 19.
3. There were only 95 taxpayers out of the 4,024 total taxpayers in the top earner group (2.4%) who were in the top 400 in 10 or more years out of 19.
4. Of the 7,600 total returns filed for this elite group over the 19-year period, 2,909 returns represented one-timers. So on average, in any given year between 1992 and 2010, about 38% of the returns filed by the top 400 taxpayer were one-timers who were not in the “Fortunate 400″ in any of the other 18 years.

 According to the IRS from its last report (now updated here with 2010 data), “The data reveal a mostly changing group of taxpayers over time. In fact, there were 4,024 different taxpayers represented in total for the 19-year period. Of these, a little more than 27 percent appear more than once and slightly more than 2 percent were represented in 10 or more years.”

MP: Whenever we hear commentary about the top or bottom income quintiles, or the top or bottom X% by income, or the top 400 taxpayers, a common assumption is that those are static, closed, private clubs with very little turnover – once you get into a top or bottom quintile, or a certain income percentile, or the top 400, you stay there for decades or life.

But reality is very different – people move up and down the income quintiles and percentile groups throughout their careers and lives. The top or bottom 1/5/10%, just like the top or bottom quintiles, are never the same people from year to year, because there is constant, dynamic turnover as we move up and down the income categories. As the new IRS data show, almost three out of every four members of the ever-changing, dynamic “Fortunate 400″ over the last 19 years were only “members” of that group for a single year."