Many US taxes-income, corporate, capital gains and other property income-have a progressive structure. Meaning, the percentage of income we pay rises as we earn more. Since the Carter administration, however, these kinds of taxes have been dramatically reduced, cuts which wholly benefit the wealthiest of Americans (as the chart below illustrates).
At the same time, increases in regressive taxes (tax rates decrease with a rise in earnings, especially payroll taxes like Social Security and Medicare) have negated the benefits of tax cuts for lower income and working Americans. In other words, while the overall tax burden has fallen somewhat, the relative burden for these working Americans has actually increased.
Created by CPE Member Economists Gerald Friedman and Sue Holmberg
September 2011
Data Source: Congressional Budget Office
Data Note: This is the Effective Federal Tax Rate for All Households, by Comprehensive Household Income Category, 1979 to 2005 (Percent).
