No one wants to pay more in taxes, but many Americans consistently call for higher taxes on the rich. With the new Biden Administration taking charge on January 20, 2021, those calls might be heeded, at least to some degree. Biden has proposed raising the tax top tax bracket for those earning at least $400,000 to 39.6% from the current 37%, in addition to some other tax code alterations.
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Whether or not tax rates actually rise, here’s the bottom line: For most of contemporary American history, the idea of higher taxes for the rich has been a reality, with historic tax rates reaching well above 37% for the country’s highest earners. In the boom years of 1951-64, for example, the top marginal rate was an astounding 91%, and it actually peaked at 92% during 1952 and 1953. All the way until 1980, the top rate was a whopping 70%.
To find out how higher tax rates could impact the rich today, GOBankingRates examined the effects of higher marginal tax rates on the top 5% in income in every state. So, instead of paying taxes on a 37% rate — the highest current tax rate in the U.S. — GoBankingRates looked at how much the top 5% would pay if the rates were raised to rates proposed by Joe Biden and to rates paid by Americans in 1978, after taking the standard deduction.
The difference in some states is quite noticeable, with high earners in Connecticut, for example, paying significantly more in a theoretical 70% bracket, as in 1978, than those in lower-income states like West Virginia.
Here’s how the wealthy would fare under Biden’s slightly revised tax brackets than if we went back to 1978 marginal rates.
Last updated: Mar. 5, 2021
