[lbo-talk] The flat tax and income inequality

Doug Henwood dhenwood at panix.com
Fri Nov 16 12:02:56 PST 2007


On Nov 16, 2007, at 1:05 PM, Robert Wrubel wrote:


> As I understand it, we already have a regressive tax
> system (you and I paying 35% while capital gains are
> only taxed at 15%.) A flat tax could be an improvement
> on that.

That's what flat-tax advocates want you to believe, but it's not true. The federal tax system is still progressive, despite all the reforms over the years.

<http://cbo.gov/ftpdocs/77xx/doc7718/EffectiveTaxRates.pdf>

effective tax rates, all federal taxes, 2004

poorest 20% 4.5% next 20% 10.0 middle 20% 13.9 next 20% 17.2 richest 20% 25.1

top 10% 26.9 top 5% 28.5 top 1% 31.1

"Effective" means what people actually pay, not what's on the books.

Doug



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