▁measurement . ▁In ▁other ▁words , ▁the ▁effective ▁tax ▁rate ▁on ▁the ▁very ▁highest ▁income ▁tax pay ers ▁fell ▁by ▁about ▁one - qu arter . ▁C BO ▁estimated ▁that ▁the ▁combined ▁effect ▁of ▁federal ▁tax es ▁and ▁government ▁trans fers ▁reduced ▁income ▁inequality ▁( as ▁measured ▁by ▁the ▁G ini ▁Index ) ▁by ▁ 2 3 % ▁in ▁ 1 9 7 9 . ▁By ▁ 2 0 0 7 , ▁the ▁combined ▁effect ▁was ▁to ▁reduce ▁income ▁inequality ▁by ▁ 1 7 %. ▁So ▁the ▁tax ▁code ▁remained ▁progress ive , ▁only ▁less ▁so . ▁While ▁pre - tax ▁income ▁is ▁the ▁primary ▁driver ▁of ▁income ▁inequality , ▁the ▁less ▁progress ive ▁tax ▁code ▁further ▁increased ▁the ▁share ▁of ▁after - tax ▁income ▁going ▁to ▁the ▁highest ▁income ▁groups . ▁For ▁example , ▁had ▁these ▁tax ▁changes ▁not ▁occurred , ▁the ▁after - tax ▁income ▁share ▁of ▁the ▁top ▁ 0 . 1 % ▁would ▁have ▁been ▁approximately ▁ 4 . 5 % ▁in ▁ 2 0 0 0 ▁instead ▁of ▁the ▁ 7 . 3 % ▁actual ▁figure . ▁ ▁In come ▁tax es ▁ ▁A ▁key ▁factor ▁in ▁income ▁inequality / equality ▁is ▁the ▁effective ▁rate ▁at ▁which ▁income ▁is ▁tax ed ▁couple d ▁with ▁the ▁progress ivity ▁of ▁the ▁tax ▁system . ▁A ▁progress ive ▁tax ▁is ▁a ▁tax ▁in ▁which ▁the ▁effective ▁tax ▁rate ▁increases ▁as ▁the ▁tax able ▁base ▁amount ▁increases . ▁Over all ▁income ▁tax ▁rates ▁in ▁the ▁U . S . ▁are ▁below ▁the