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The US Tax and Transfer System Has Become More Progressive

by March 7, 2025
March 7, 2025

Jeffrey Miron and Jacob Winter

A man with a calculator stacking cubes with red percentage signs and blue arrows.

Much debate exists about whether the US tax and transfer system unfairly benefits wealthy people at the expense of ordinary Americans. For example, Democratic members of Congress are criticizing Republican efforts to extend the Trump tax cuts. 

It is important, however, to consider the system as a whole. Recent research (Cato Research Brief no. 423) finds that the system has become more progressive over time: 

The consensus of existing research is that the tax and transfer system redistributes substantially more now than it did in the past 40–60 years—regardless of the research method or measure of redistribution used. 

The authors acknowledge debates about how the system affects the wealthiest, but they conclude that 

[T]here have been large increases in the net transfer rate to the bottom, and the size of these increases swamps changes at the top. 

These findings should inform proposals to reform tax-and-transfer policies.

This article appeared on Substack on March 6, 2025.

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