Under Obama's budget, total tax rates for the rich -- and, really, for the entire country -- would likely hit their highest levels in about 40 years. After raising taxes in the Affordable Care Act, and raising rates on household income over $450,000 after we jumped the fiscal cliff, the president has proposed a budget that would continue to push taxes up on the richest families by limiting their deductions.
The piece I wrote yesterday about the trajectory of taxes drew a lot of questions in the comment section. Let me try to clear some of them up here.
First, let's look at the history of effective tax rates -- that's income taxes, payroll taxes, excise taxes, corporate taxes, the whole shebang -- for the top 1 percent; the top 5 percent (minus the very top percentile); and the total country. This graph is borne from CBO data you can play with here:
The biggest story is that total tax rates have fallen for everybody since the late 1970s, because, as you know, we kept cutting taxes. The second biggest story is that those tax cuts were offset slightly by income gains, as families got richer during good times (mostly the 1990s) and passed into higher tax brackets. Third, note that the first Reagan tax cut, coinciding with a recession, collapsed rates dramatically at the top; Bush I and Clinton raised taxes on the rich to help close the deficit in the early 1990s.