support for people experiencing poverty: the welfare program TANF, the earned income tax credit, SNAP, and

Medicaid. If a reduction in inequality is desired, these programs could receive additional funding.

The federal income tax, which is a progressive tax system designed in such a way that the rich pay a higher

percent in income taxes than the poor, funds the programs. Data from household income tax returns in 2018

shows that the top 1% of households had an average income of $1,679,000 per year in pre-tax income and paid

an average federal tax rate of 25.4%. The effective income tax, which is total taxes paid divided by total

income (all sources of income such as wages, profits, interest, rental income, and government transfers such

as veterans’ benefits), was much lower. The effective tax paid by that top 1% of householders paid was 20.4%,

while the bottom two quintiles actually paid negative effective income taxes, because of provisions like the
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