The effective federal tax rate of the richest 1 percent of Americans has plummeted even while their incomes have skyrocketed, as the chart below shows. Households in the top 1 percent more than doubled their incomes from an average of more than $800,000 in 1993 to nearly $1.9 million in 2007. During that same period, their effective federal tax rate dropped from 35 percent to 30 percent.
That’s good for the wealthy but bad for a country facing long-term deficits. Any serious effort to balance the federal budget must start by asking the country’s most privileged people to pay their fair share. The alternative is to raise taxes on the middle class and abandon the least fortunate—while the rich get richer, and the country sinks ever deeper into debt.
Michael Linden is Director for Tax and Budget Policy at the Center for American Progress.