The deduction is available to all, whether or not they itemize. Of course, the less your income the less easy it is to donate. More annoying than the regressivity of the deduction is the fact that it subsidizes consumption which has nothing to do with altruistic purposes by any definition--a doubly regressive deduction, in effect. There was a book about six years ago, name escapes me, which detailed the nature of the sector benefitting from the deduction. Lots of universities, country clubs, church activity having nothing to do with the poor.
> > >Our tax system is not as progressive as I would like. But it is
> >progressive. And Barlett and Steele are trying to mask the fact that
> >it is progressive.
>
> Is this true even when you look at the *effective* tax rate?
income taxes are unquestionably progressive. if you throw in all other taxes, federal state and local, the distribution flattens out (gets more proportional) considerably.
> . . .
> How do you know that this is true? How do you know that their
> examples do not take this into account? I remember Jonathan Kozol, in
> his book *Savage Inequalities* making the claim that property tax
> rates in rich districts tended to be less (often far less),
> percentage-wise, than in poor districts. The poor would pay much
> larger portions of their incomes and they would still fall short of
> the amount of money the rich could send to their schools.
We're mixing up two different things here. You're right that localities with different property wealth per head yield an inherently regressive tax result under local financing of any public service. A separate matter is capping taxes based on withholding property from the market. Whether that proves to be regressive or not depends on whether high- or low-value property appreciates more, and on how often homeowners sell, by income class, among other things. Probably high-income homeowners' property appreciates faster and higher in up markets, but many of these people in CA took a huge bath if they were homeowners when the housing market collapsed. I bet this outweighed any relief they enjoyed due to the tax cap. I have no idea how frequency of sales of homes varies by income class.
> >--Barlett and Steele don't seem to understand that the tax deductible
> >IRA as it existed between 1981 and 1986 was a *regressive* piece of
> >the tax code.
>
> But, wasn't the contribution limited to something like one or two
> thousand dollars per person? How is that regressive (if I've
> remembered correctly), since it seems that there was a distinct
> (relatively low?) cap on the amount of deduction?
Any savings preference that is available to all is going to be regressive because savings rates, obviously, rise with income class. Lots of lower-income people for whom savings preferences are available don't use them. As a matter of fairness, one might be concerned that savings deductions be 'equally' available to all taxpayers. [the defintion of equally is elastic] Incidentally, if you like savings deductions, then you like consumption taxation.
MBS