Current State of Wealth Inequality
The Federal Reserve's Survey of Consumer Finances shows the top 1% of U.S. households held roughly 30% of all wealth as of 2022, while the bottom 50% held about 2.5% (https://www.federalreserve.gov/publications/2023/consumer-finances-2022.htm). The Gini coefficient for household wealth stood near 0.87, indicating high concentration. The richest 10% controlled more than 70% of total net worth, a level that has remained elevated since the post-2008 recovery (https://www.federalreserve.gov/publications/2023/consumer-finances-2022.htm). Federal Reserve data also show the top 1% owned more wealth than the bottom 90% combined, a gap that has widened in real terms over the past three decades (https://www.federalreserve.gov/publications/2023/consumer-finances-2022.htm).
Income inequality tracked by the Census Bureau's Current Population Survey shows the top 5% of earners taking home more than 23% of all pre-tax income, while the bottom 20% earned less than 3% (https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html). The Gini index for household income rose to about 0.49 in 2023, up from 0.43 in the early 1990s (https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html). Real median household income, adjusted for inflation, remained below its 1999 peak in many districts, according to Census Bureau tables (https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html). The Bureau of Labor Statistics reports that wage growth for the top 10% of earners outpaced growth for the bottom 10% in most years since 2000 (https://www.bls.gov/).
Tax Policy and Redistribution Mechanisms
Federal Tax Progressivity
The Congressional Budget Office finds that the top 1% of households paid an average federal tax rate of about 33% in 2021, compared with roughly 14% for the bottom 20% (https://www.cbo.gov/publication/57910). Individual income taxes, payroll taxes, and corporate taxes remain the main levers of federal redistribution (https://www.cbo.gov/publication/57910). The Tax Cuts and Jobs Act of 2017 lowered the top individual rate to 37% and reduced corporate rates to 21%, with CBO estimating the changes tilted the distribution of after-tax income slightly toward higher earners (https://www.cbo.gov/publication/57910). The IRS Statistics of Income show that the top 400 filers by adjusted gross income paid an effective rate below 20% in some years, partly due to capital gains treatment (https://www.irs.gov/statistics/soi-tax-stats-annual-extract-of-tax-statistics).
Payroll and Consumption Taxes
Payroll taxes for Social Security and Medicare are capped at earnings above $176,100 in 2025, meaning wages above that threshold are not subject to the 12.4% Social Security tax (https://www.ssa.gov/oact/programs/supplementalsecurityincome/).
The combined effective payroll tax rate for the top 1% is far lower than for the middle 20% because a larger share of their income comes from
