The Top Marginal Tax Rate

The ongoing national political debate includes proposals to increase the top federal marginal tax rate on the highest income taxpayers.

The Internal Revenue Service (IRS) reports that less than one percent of all individual federal income tax returns were subject to the highest individual marginal tax rate of 35 percent. Taxes collected at the 35 percent marginal rate accounted for 17.8 percent of the $953 billion in individual federal income taxes in 2009.

QUESTION: Each one percent increase in the top individual marginal income tax rate would have generated how much additional federal income tax in 2009?

A. over $100 billion
B. 45 to $60 billion
C. about $25 billion
D. almost $5 billion


D. almost $5 billion

According to data from the IRS, each 1 percent increase in the top marginal personal income tax rate would have generated and estimated $4.8 billion in tax revenue in 2009. That is equivalent to about 0.5 percent of the $953 billion in individual federal income taxes generated in 2009.

Source: Table 3.5 Internal Revenue Service Tax Stats:

For questions, contact Bill Pinkovitz