11. Progressive and Regressive Taxation in the United States: Who's Really Paying (and Not Paying) their Fair Share?
- Author:
- Brian Roach
- Publication Date:
- 12-2010
- Content Type:
- Working Paper
- Institution:
- Global Development and Environment Institute at Tufts University
- Abstract:
- The 2010 debate over extending the 2001 and 2003 Bush tax cuts often focused the fairness of the tax distribution in the United States. Unfortunately, discussions of tax fairness rarely take into account the distribution of the overall tax system, typically focusing only on the federal income tax or on federal taxes without consideration of the state and local tax system. This paper updates a 2003 analysis (Roach, 2003) to present a current assessment of the distribution of all components of the U.S. tax system, including recent trends. The results show that the overall federal tax system is quite progressive. But when state and local taxes are included as well, the overall U.S. tax system is only slightly progressive. Further, most of the progressivity of the overall tax system occurs in the lower half of the income spectrum. At upper-income levels, progressivity levels off and actually reverses at the highest income levels. Median-income taxpayers pay about 25% of their total income in taxes, while taxpayers in the top 1% pay about 31% of their income in taxes. Thus claims that America has a “highly progressive” tax system do not appear to be valid.
- Topic:
- Economics, Social Stratification, and Monetary Policy
- Political Geography:
- United States