Monday, March 21, 2011

Interesting

The tax foundation releases an interesting statistic showing that the rich in the U.S. pay the largest share of personal and payroll taxes of any OECD country. I don't think it includes VAT, which would likely increase the progressiveness of the U.S. system since it has none.

This sentence is also interesting:
Interestingly, countries with top personal income tax rates that are higher than in the U.S., such as Germany, France, or Sweden, have ratios that are closer to 1 to 1. Meaning, the share of the tax burden paid by the richest decile in those countries is roughly equal to their share of the nation's income.


I know this can be shown in the U.S. over time as well - when top marginal tax rates were lower, the highest earning 10% earned a smaller share of overall income. So keep in mind that there seems to be a reverse correlation between the actual average tax rates the rich pay and their share of the overall burden. In other words, they are not actually hurting to pay this large a percentage of overall taxes even if sometimes these comparisons are meant to show how unfair our system is.

h/t Greg Mankiw

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Update:

Matt Yglesias
points out that it also doesn't include US regressive taxes - State and Local (he's wrong that it does not include payroll though). And he fails to mention it does not include VAT.

and Karl Smith comments.

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