Discuss Question 21

21. FISCAL KNOWLEDGE: On average, the top one percent of federal taxpayers by income pay an effective income tax rate of less than 20 percent.

ANSWER: True – According to data from the Tax Policy Center, a non-partisan tax analysis partnership between the Urban Institute and the Brookings Institution, the median effective income tax rate of the top one percent is about 18.8%, which is far below the top tax bracket of 35%. This is due in large part to the fact that the wealthiest Americans earn most of their income through long-term capital gains, which are taxed at a flat rate of 15%.  It’s important to note that this only relates to income taxes and not payroll taxes or other taxes.