ISN’T TAX POLICY INTERESTING?….HERE AT CALPUNDIT IT IS!….A couple of months ago, in a rant about the Wall Street Journal’s “lucky duckies” editorial, I noted that when you take all taxes into account, tax rates are close to the same for all income groups.
Then, a couple of weeks ago, I printed a chart showing that state taxes are regressive, and concluded that “Federal income tax is progressive, but this only barely makes up for the regressive nature of state and local taxes.”
Yesterday, the New York Times finally put all the pieces together for me and showed total tax rates for all income levels. And guess what? It’s pretty flat. If you make minimum wage you pay out about 18% of your income. If you’re the CEO of Microsoft you pay out about 19%. There will undoubtedly be quibbles about the exact numbers the Times used in this analysis, but the overall picture is pretty clear: the American tax system is pretty flat already. If federal income tax (and therefore most state income taxes) moved to a flat model, the end result would a tax system that was heavily regressive. I’m sure the Wall Street Journal must be delirious over the possibility.
Thanks to Slate for the pointer.