Tax Returns Show Two Year Decline In Reported Incomes

by Leroy Baker, Tax-News.com, New York

02 August 2004

Newly released IRS data has shown that income reported on tax returns fell for an unprecedented two consecutive years from 2000 to 2002 following the bursting of the stock market bubble.

The data revealed that total adjusted gross income on tax returns fell 5.1%, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. After the factoring in of population growth over this period, average incomes declined even more, by 5.7%.

Adjusted for inflation, the income of all Americans fell 9.2% from 2000 to 2002, according to the newly available figures.

Meanwhile, from 2000 to 2002, individual income taxes fell 18.8%, more than three times the decline in adjusted gross incomes, the IRS's latest statistical reports show, a fact partly attributable to President Bush’s 2001 tax cut package.

It is thought this detailed information on tax returns will help the government to analyze fluctuations in its most important source of revenue: personal income taxes.

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