Taxes on the Rich
Has the average effective federal tax rate on households in the top 1% of incomes in the U.S. increased, decreased, or stayed about the same over the past four decades?
Correct Answer
The effective federal tax rates paid by households in the top 1% of incomes in the U.S. have been roughly level for more than four decades. Unlike the incomplete and misleading tax rates reported by the media and politicians, the Congressional Budget Office publishes data on the federal tax rates of different income groups based on their actual taxes paid (not marginal tax rates) while accounting for nearly all forms of income and all types of taxes, such as wages, salaries, capital gains, dividends, pensions, health benefits, payroll taxes, excise taxes, corporate taxes, hidden taxes, and write-offs (aka preferences). Over the full span of CBO data — which currently extends from 1979 to 2022 — the effective federal tax rates of U.S. households with the highest 1% of incomes have averaged from 29% to 32% during every decade with no upward or downward trend.
















