January 12, 2021

Robesonian: Tax Debates Feature Many Myths

media mention

On the other hand, our federal tax code, even after the Bush-era and Trump-era tax changes, is rather progressive. It taxes the wealthy at much higher rates than the nonwealthy. If you combine the effects of all taxes — and you should because we all pay taxes at multiple levels and because lots of federal money sloshes through states and localities — the federal effect predominates.

According to the latest modeling from the Institute on Taxation and Economic Policy, the lowest-income quintile (or 20%) of American households pays about 20% of their incomes to government at all levels, either directly or indirectly (by paying higher prices for taxed goods, for example). The second-lowest quintile pays 22%. The middle quintile pays 26%. The upper-middle quintile pays 28%. And the higher-income quintile pays 31%. Read more