Responsible Wealth: Tax Fairness

The country is not broke! Far from it. The top 1% of taxpayers took in 90% of income gains in 2010. At the same time, those wealthy households have paid less and less in taxes over the past several decades. For example:

  • Capital gains (where the richest taxpayers get most of their income) and dividends are taxed at a top rate of 20%—well below the 39.6% top marginal rate on ordinary income. 
  • The top marginal tax rate (the rate we tax the last dollars earned by the highest income taxpayers) has been cut from 91% in 1960 to 70%, to 50%, then down to 39.6% and 35% in 2001 under George W. Bush. In 2013, this rate was increased to 39.6% on incomes over $400,000 a year ($450,000 a year per couple).
  • The federal estate tax was recently strengthend for the first time in 28 years. In 2001, the estate tax kicked in after $1 million of income ($2 million per couple) and affected less than 2% of estates each year. In 2010, the federal estate tax was completely repealed. In 2011, exemption rates were raised to $5 million ($10 million per couple), with less than .25% of estates paying any estate tax at all. In 2013, the federal estate tax rate was increased to 40% (up from 35%) and exemption rates were indexed to inflation, raising them to $5.25 million ($10.5 million per couple).