Summary of the Latest Federal Income Tax Data, 2023 Update
The latest IRS data shows that the U.S. federal individual income tax continued to be progressive, borne primarily by the highest income earners.
43 min readThe latest IRS data shows that the U.S. federal individual income tax continued to be progressive, borne primarily by the highest income earners.
43 min readWhen we discuss tax policy, the conversation inevitably turns to who pays, who should pay, and how much they should pay. Unfortunately, the tax burdens debate is often missing a key point: how income transfer programs—like Social Security or Medicaid—affect households’ tax burdens.
Tax burdens rose across the country as pandemic-era economic changes caused taxable income, activities, and property values to rise faster than net national product. Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978.
24 min readThe tax burden for most Americans in 2019 –67.8 percent—will come primarily from payroll taxes, not income taxes. While the income tax is progressive, with average rates rising with income, the payroll tax is regressive, with the highest average rate falling on Americans with the lowest incomes.
3 min readAverage income tends to rise dramatically as someone ages and gains education and experience. Viewing just one year of income tax data without digging any deeper misses some crucial context.
2 min readFrom 1986 to 2016, the top 1 percent’s share of income taxes rose from 25.8 percent to 37.3 percent, while the bottom 90 percent’s share fell from 45.3 percent to 30.5 percent.
3 min readFederal tax rates vary by income group and tax source. The federal tax system redistributes income from high- and low-income taxpayers.
3 min readIn the 1950s, when the top marginal income tax rate reached 92 percent, the top 1 percent of taxpayers paid an effective rate of only 16.9 percent. As top marginal rates have fallen, the tax burden on the rich has risen.
4 min readWhile progressivity may look appealing—particularly at a time when policymakers in Congress seem to be competing on how best to extract revenue from the wealthiest in the country—it may not raise the revenue intended.
2 min readRecent plans to increase the tax burden on wealthy Americans, such as higher marginal income tax rates and wealth taxes, are flawed in several ways, including in their lack of understanding of tax history.
4 min readThe fall and then rise of entrepreneurial income claimed on the wealthy’s 1040 tax returns clearly tracks the seeming decline of inequality from 1950 to 1980, followed by the sudden rise in inequality since 1986. The shifting composition of income claimed by the rich due to changes in tax laws explains this illusion.
12 min readThere is a chance that Senator Warren’s proposed wealth tax would be found unconstitutional, but opinions are mixed and the precedents go both ways.
2 min readSen. Elizabeth Warren recently proposed a wealth tax on high-net-worth individuals, a type of tax that is poorly targeted, difficult to administer, and raises constitutional questions.
4 min readDue to a narrow tax base and a decrease in capital gains realizations, Congresswoman Ocasio-Cortez’s plan to tax income above $10 million would not raise as much revenue as intended. See our 10-year revenue estimates.
9 min readRecent interest in raising the tax burden on high-income individuals glosses over the fact that the U.S. federal tax code is already progressive.
3 min read