Line graph showing the 100 years of tax policy under specific leaders

100 Years of Tax Policy: The income tax rate for the highest earners has fluctuated from a low of 24% to a high of 92%. Coolidge & Hoover Colorized by Bianca Alexis. Library of Congress (Carter); Official White House photo by Eric Draper (W. Bush); Official White House Photo by Pete Souza (Obama); Official White House photo by Shealah Craighead (Trump); Official White House Photo by Adam Schultz (Biden); Courtesy of the White House Historical Association (All Other Images)

Article Options

Presentation View

Lexile® measure

Should Wealthy People Pay Higher Taxes?

One of the issues that always sparks heated debate in Washington is how much to tax Americans on the income they earn—and whether people who make more money should be subject to a higher tax rate than people who make less. What Congress decides can have a huge impact on how much cash the federal government has to spend on programs and services. President Biden’s 2024 budget proposal calls for increasing taxes on individuals who make more than $400,000 a year, but it’s up to the House of Representatives and the Senate to pass a budget and set tax policy.

 

Two U.S. senators square off about whether it’s good policy to increase taxes on wealthy Americans.

Comic of Benjamin Franklin meeting with the IRS to talk about earning pennies

Tim O’Brien/CartoonStock

Tax policy should start with making sure each of us is paying our fair share. Too often, wealthy Americans are using loopholes and government-funded tax breaks to pay overall lower tax rates than middle-class and low-income Americans.

Taxes are the key revenue stream for our federal, local, and state governments. This money funds essential services that benefit each and every one of us. Every day we can see the benefits that taxes have on our society: They fund schools, health care, scientific research, border security, national defense, and much more. These are programs that benefit us all, directly or indirectly, and help us build a stronger, more prosperous society.

Unfortunately, thanks to decades of bad choices in Washington, these programs are in danger. The federal government currently has more than $32 trillion in debt, and the cost of that debt grows daily.

Raising taxes on the richest Americans can help save programs we all depend on.

Headshot

U.S. Senate Photographic Studio

Senator Mark Warner

Raising revenue through taxes on those who can afford the cost, the richest Americans, is the clear way to start making a dent in our national debt, while preserving the programs we all benefit from. It’s also not an outlandish or extreme suggestion. The U.S. is consistently ranked near the bottom of industrialized countries for the amount of tax revenue raised as a share of GDP;* in 2021, the U.S. ranked 32nd out of 38 industrialized countries. If we don’t start collecting more in taxes, soon the only option will be to drastically cut spending—something that would affect young people more than anyone else.

Long before I got into politics, I spent 20 years as a businessman, and I was lucky enough to do pretty well for myself: I was the first in my family to graduate from college before I got in on the ground floor of a little start-up industry known as the “cellular telephone.” I think folks like me, who have benefited so much from the opportunities this country has to offer, ought to give back. We should pay a little bit more in taxes, because we can afford to—and because we didn’t get here on our own. 

—SENATOR MARK WARNER

Democrat of Virginia


*GDP stands for gross domestic product; it’s a way to measure a nation’s overall wealth.

Demands for higher taxes on the wealthy have become increasingly popular over the past decade. But the numbers prove that penalizing higher earners will ultimately make life harder for most people.

The world’s best economists agree that the United States already has one of the most progressive tax systems in the world. According to recent Internal Revenue Service (I.R.S.) data, the top 1 percent of earners in the U.S. contributed $723 billion in income taxes, much more than the $450 billion the bottom 90 percent paid. To see how an even bigger tax burden on the wealthy would harm our economy, all you have to do is compare data from 2017, before the Tax Cuts and Jobs Act reduced individual income tax rates, to data from 2020, after those tax cuts went into effect in 2018.

Making the highest earners pay more will ultimately make life harder for most people.

Headshot

U.S. Senate Photographic Studio

Senator Marsha Blackburn

In 2020, the federal government collected $1.7 trillion in individual income taxes, a $107 billion increase compared with 2017. How is this possible? When taxpayers give less to the government, they put the money they keep to good use. After the tax cuts took effect in 2018, we saw a massive increase in investment that benefited everyone. Those high-earning Americans poured their money back into the community, which helped business owners expand and create higher-paying jobs. Those new employees, in turn, started contributing their tax dollars to the economy. At the same time, because the government took less from their paychecks, workers had more money to spend every month.

As a former small business owner, I can tell you that the more money you have in your pocket, the easier it is to take care of your family, your employees, and your community. If we raise taxes on the people who drive the economy, investment will dry up, taking growth and exciting job prospects with it. This would be bad for all Americans, but especially young people trying to set themselves up for future success. 

—SENATOR MARSHA BLACKBURN

Republican of Tennessee

Life and Culture
Debate

Teaching Resources
Text-to-Speech