New figures from the Internal Revenue Service (IRS) show that the number of American citizens who report more than $1 million in income have jumped by a staggering 41 percent this year alone.
As reported by Politico, the IRS claims to have processed up to 387,840 returns reporting seven-figure incomes by mid-July; at the same time last year, the agency only found 274,879. The increase has been attributed to a strong performance on Wall Street last year, before the inflation crisis hit; in 2022 thus far, millionaires reported a collective total of $252.5 billion in capital gains, 80 percent higher compared to the previous year. In addition, millionaires’ salaries and wages rose by 45 percent.
Some have said that the rise in the total number of millionaires may be one reason that the economy has not yet totally collapsed due to the inflation crisis, with the economy now seeing a significantly higher number of people with more disposable income. This has also led to greater revenue for the Treasury through taxation, with tax receipts expected to surpass $1 trillion this year alone.
This also marks an increase from the number of millionaires in the year prior to the COVID-19 pandemic, when roughly 260,000 individuals reported seven-figure incomes. The year 2022 has also seen more people reporting capital gains compared to previous years, with 27 million returns with gains or losses in this regard; in 2021, this number was about 23.2 million, and 20.6 million in 2020.
Overall, the numbers represent “a dramatic increase,” said Mark Booth, a former official with the Congressional Budget Office (CBO).
“Usually capital gains realizations follow the stock market,” Booth added. “You would expect a significant reduction in capital gains realizations in tax year 2022 based on the first nine months” of this year.
However, many of these gains may ultimately be erased in the coming months, as the Federal Reserve continues raising interest rates in an effort to combat inflation, which in turn leads to a decline in asset prices.