NCPA - National Center for Policy Analysis

Distribution of the Tax Burden

April 7, 2004

Contrary to popular belief, taxes on the wealthy have risen over time and the Bush tax cut in 2001 barely kept them from rising further, according to new data on the distribution of the tax burden by the Congressional Budget Office.

According to Bruce Bartlett:

  • In 1984, those in the bottom quintile -- or fifth of taxpayers, by income -- paid an average federal tax rate (individual, payroll, corporate and excise) of 10.2 percent.
  • Those in the top quintile paid 24.5 percent, the top 10 percent paid 25.2 percent, the top 5 percent paid 26.1 percent, and the top 1 percent paid 28.2 percent.

Thus, those at the top paid about two and a half times more than those at the bottom, says Bartlett:

  • In fact, the data show that those in the bottom quintile are only paying 5.4 percent, about half of what they did 20 years ago.
  • This is down from 6.4 percent just the year before, owing to the Bush tax cut.

Those in the top quintile did pay a little less in 2001 than they did in 2000: 26.8 percent versus 28 percent. But this is still well above the average tax rate they paid in 1984. Interestingly, those at the very top saw virtually no cut at all, even though liberals constantly say that they got the lion's share of the 2001 tax cut, explains Bartlett.

Between 2000 and 2001, those in the top 10 percent of households saw a drop from 29.7 percent to 28.6 percent and those in the top 5 percent saw a decline from 31.1 percent to 30.1, but those in the top 1 percent saw their effective tax rate virtually unchanged: 33.2 percent versus 33 percent, says Bartlett..

Source: Bruce Bartlett, "Distribution of the Tax Burden," National Center for Policy Analysis, April 7, 2004.


Browse more articles on Tax and Spending Issues