page_title: Political debates about the United States federal budget
section_title: Income taxes
hierarchical_section_title: Political debates about the United States federal budget / Debates about tax policy / Can the U.S. outgrow the problem? / Income taxes
caption_attribution_description: English: Average tax rate percentages for the highest-income U.S. taxpayers, 1945-2009. The average tax rate for the top 0.01% (one taxpayer in 10,000) was about 60% in 1945 and fell to 24.2% by 1990. The average tax rate for the top 0.1% (one taxpayer in 1,000) was 55% in 1945 and also fell to 24.2% by 1990, following a similar downward path as the tax rate for the top 0.01%. Between 1990 and 1995, the average tax rate for both the top 0.1% and top 0.01% increased to about 31%. After 1995, the average tax rate for the top 0.01% was lower than that for the top 0.1%.
context_page_description: Political debates about the United States federal budget discusses some of the more significant U.S. budgetary debates of the 21st century. These include the causes of debt increases, the impact of tax cuts, specific events such as the United States fiscal cliff, the effectiveness of stimulus, and the impact of the Great Recession, among others. The article explains how to analyze the U.S. budget as well as the competing economic schools of thought that support the budgetary positions of the major parties.
context_section_description: The historical record indicates that marginal income tax rate changes have little impact on job creation or employment.
  During the 1970s, marginal income tax rates were far higher than subsequent periods and the U.S. created 20.6 million net new jobs.
  During the 1980s, marginal income tax rates were lowered and the U.S. created 19.5 million net new jobs.
  During the 1990s, marginal income tax rates rose and the U.S. created 18.1 million net new jobs.
  From 2000-2010, marginal income tax rates were lowered and the U.S. created only 2.2 million net new jobs, with 9.2 million created 2000-2007.
  The Center on Budget and Policy Priorities (CBPP) wrote in March 2009: "Small business employment rose by an average of 2.3 percent (756,000 jobs) per year during the Clinton years, when tax rates for high-income filers were set at very similar levels to those that would be reinstated under President Obama's budget. But during the Bush years, when the rates were lower, employment rose by just 1.0 percent (367,000 jobs)." CBPP reported in September 2011 that both employment and GDP grew faster in the seven-year period following President Clinton's income tax rate increase of 1993, than a similar period after the Bush tax cuts of 2001.
  In addition, Warren Buffett has argued that taxes have little to do with job creation, writing in August 2011: "And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what's happened since then: lower tax rates and far lower job creation." From 2002 to 2011, the nine US states with the highest income taxes grew their economy 8.2%, all states with an income tax grew 6.3%, and the nine states without an income tax grew 5.2%.
  A more specific, frequently debated, proposal supported by prominent Democrats is to significantly increase the taxes of the top 1 percent of income earners to generate additional revenue. According to the Tax Foundation, the so-called "super-rich" accumulated more than 20 percent of the nation's total adjusted gross income in 2008 and paid 36 percent of the total income tax. Republican opponents fear that any type of large tax hike, even to the wealthy, would decrease both job creation and investment, slowing the economy even further. In an op-ed in The New York Times in August 2011, Buffett wrote in support of such a tax hike on the richest Americans, stating that the federal government should "stop coddling the super-rich" to help decrease the deficit. In response, conservative commentator Pat Buchanan challenged Buffett, and any other rich people who wanted higher taxes, to voluntarily donate the money to the IRS instead.
caption: Average tax rate percentages for the highest-income U.S. taxpayers, 1945-2009
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