What is the average federal individual income tax rate on the wealthiest Americans?

Abstract

Abstract I estimate the average federal individual income tax rate paid by America’s 400 wealthiest families, using a relatively comprehensive estimate of their Haig–Simons income: their change in wealth, plus US individual taxes. I do so using publicly available statistics from the IRS Statistics of Income Division, the Survey of Consumer Finances, and Forbes magazine from 1992 to 2020. This paper’s baseline analysis uses all years of data and systematically varies start and end years. The baseline estimates of the average federal individual income tax rate on the wealthiest 400 families are 9.6 per cent in nominal terms and 12.0 per cent in real (inflation-adjusted) terms. Sensitivity analyses yield nominal estimates in the 6.7–14.6 per cent range and real estimates in the 8.4–17.9 per cent range. These estimates can be combined with effective corporate income tax rates to estimate all-in effective income tax rates on the wealthiest.