I wrote:
At present, taking into account Social Security tax, state and local taxes, the U.S. has a kind of flat rate tax system. It is kind of bowed in the middle. Poor people pay around 30%, middle class people around 25%, and rich people 30 to 35%.
These percentages are much too high. I should not try to quote these things off the top of my head. Here are the corrected figures as reported in the New York Times a few years ago.
Income group, Average pretax income, Total government tax receipts, As a percentage of income
Bottom 20%, $7,946, $1449, 18%
Second 20%, $20,319, $2847, 14%
Middle 20%, $35,536, $5,622, 16%
Fourth 20%, $56,891, $9,835, 17%
Top 20%, $116,666, $21,623, 19%
Sources: Consumer Expenditure Survey of the Bureau Of Labor Statistics; R.J. Reynolds Tobacco; Beer Institute; Wine America; Wine and Spirits Wholesalers of America; American Petroleum Institute; Tax Foundation
Conclusion: "Taking all types of government taxes into consideration, the tax burden, as a percentage of pretax income, is roughly the same for all income groups."
The income tax is progressive, but all other taxes are regressive, so a flat income tax would result in highly regressive overall taxes. Actually, these figures are out of date. Taking into account recent cuts in capital gains, high bracket income taxes and inheritance tax we may already have a regressive system.
- Jed
