Economic Snapshot | Budget, Taxes, and Public Investment

Highest-income households can afford to pay more in taxes

Between 1979 and 2007, the share of after-tax national income going to the top 1% of households more than doubled, jumping from 7.5% to 17.1%. During this time, the middle 20% of households have seen their share of total national income slide from 16.5% to 14.1%. Instead of pushing back against widening income inequality, recent tax policies have actually compounded this trend: the 1% of households with the highest incomes benefited disproportionately from the Bush-era tax cuts, reaping 38% of the total benefit, while the middle 20% of households received only 11%.

The nation has the resources to support public investments and economic security programs that are currently in danger of being cut by the ongoing budget negotiations. Better budgeting would ask the highest-income households to contribute more in taxes, because their total tax obligations have fallen and their after-tax income has risen over the past 30 years.

For more on this topic, read EPI’s recent issue brief The facts support raising revenues from highest-income households.