In 2016, the top 1% paid an effective 35% total tax rate—same as in 1979 when we had 70% marginal tax brackets. Rates are surely a bit lower with the 2017 tax cuts, but this is the latest CBO data.
The top-earning 20% pays 87% of all federal income taxes. The top-earning 40% pay 101% of all federal income taxes. This is not merely a function of the rich earning a higher share of the income than earlier. Even if you divide each group's share of all federal taxes by its share of the income, the federal tax code has become more progressive.
In 2008 the OECD ranked the U.S. as the most progressive income tax in the OECD—even adjusting for differences in income inequality. And this understates the gap because it doesn't count Europe's regressive VAT taxes.
None of this suggests the wealthy's taxes cannot rise, or loopholes cannot be closed. The point is we are starting from the OECD's most progressive tax code—and one that becomes more progressive each decade.
Brian Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter @Brian_Riedl.
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