Taxes are as contentious as ever this election season. Republican presidential candidate Mitt Romney says that if he gets elected, he'll extend the Bush tax cuts for the wealthiest Americans, slash income tax rates by an additional 20 percent across the board, and make up for the lost government revenue by closing unspecified tax loopholes. Democratic President Barack Obama argues that those measures will plunge the nation further into debt. He thinks tax rates for the wealthiest Americans can afford to, and should, increase.
A lot of the debate turns on whether tax rates are currently too high, and for whom. So, how do current tax rates compare to the rates over the past 50 years? The following graph charts changes in average tax rates for the top 0.1 percent, top 1 percent and middle 20 percent of earners in the United States since 1960, using data gathered by the National Economic Council.
For context, the top 0.1 percent of earners have an average annual income of $3.9 million, and the top 1 percent of earners make $717,000 a year, on average, according to data gathered by the New York Times. The average American worker earns a salary of $47,000.
As the graph shows, tax rates have become less "progressive" in the U.S. over time. A progressive tax code is one in which the tax rate increases as the amount of taxable income increases. Progressive taxes attempt to reduce the tax burden of people with a lower ability to pay, by shifting the tax burden onto higher earners.