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From your linked article: "Why, according to the OECD, is the US system so progressive? Not because the rich face unusually high average tax rates, but because

From your linked article: "Why, according to the OECD, is the US system so progressive? Not because the rich face unusually high average tax rates, but because middle-income US households face unusually low tax rates--an important point which de Rugy mentions and Chait ignores. How does the picture change if you take indirect taxation into account? That would make the US system look even more progressive, because the US doesn't rely on a flat consumption tax like most other governments. What does the tax-rate schedule tell you about progressivity? Very little, until you factor in deductions, thresholds and opportunities for avoidance. High top rates are meaningless if nobody is paying them. What happens to tax progressivity at the very top of the US income distribution--inside the top one percent, or 0.1 or 0.01 percent? Good question. When it comes to international comparisons, I don't know of any good answers..." The real point of the article is that progresssivity is hard to measure. But when so much of the income growth in the country is captured by a class that doesn't pay into the SS system, the result speaks for itself.

rayiner 8y ago
No, the real point of the article is that "according to the OECD, "the US system [is] progressive." The most salient feature of the U.S. tax system is that "middle-income US households face unusually low tax rates"--i.e. the system is highly progressive. The U.S. tax system is progressive well into the top 1% of income earners (by contrast, Germany, Sweden, and Denmark have a relatively flat tax structure after about 1.5x the median income). There is a lot of focus on tax breaks for the top 0.1%, but 90% of U.S. income is earned by people outside that group, and 80% is earned by folks outside the top 1%.
- fjsolwmv 8y ago
  What about health insurance? USA's privately funded health insurance is equivalent to flat or regressive tax, not a progressive tax.
  - rayiner 8y ago
    Half of US health care expenditures come from the government. Medicaid is funded by general tax revenues (based on highly progressive income taxes). Medicare is funded by a flat tax with no income cap. In Germany by contrast, health care is paid for with a regressive mandatory insurance premium of 15.5% on income up to about $60,000.
- vannevar 8y ago
  Read it all the way to the end. Again, from the article: "Should the US system be even more progressive than it already is, bearing in mind the skewness of the pre-tax distribution, especially at the very top? Maybe it should--but a steeper tax-band schedule is a dumb way to improve fairness and raise more revenue." A progressive tax system is progressive in effect, not just in form. The author is saying that people who focus on the tax rate bands are barking up the wrong tree, because the US system already looks like one of the most progressive, even though it may actually not be.
  - rayiner 8y ago
    From your quote: "Should the US system be even more progressive than it already is..." The only way to read that is as acknowledging that the system already is progressive. Indeed, according to the title of the article, it is "unusually progressive." The part about tax-band schedules is not an assertion that the system is not progressive "in effect." (That theory cannot be reconciled with the data presented in the article, which looks at taxes paid, not tax bands.) Instead the author is saying that if we want to make the system "even more progressive than it already is"--which he does not concede we should, he leaves that as a "maybe"--then we should be looking deeper than tax bands. (And he points out that the possibility of loopholes and preferential treatment does not indicate that the U.S. system is not progressive, because other countries do that too.)

rayiner 8y ago

No, the real point of the article is that "according to the OECD, "the US system [is] progressive." The most salient feature of the U.S. tax system is that "middle-income US households face unusually low tax rates"--i.e. the system is highly progressive. The U.S. tax system is progressive well into the top 1% of income earners (by contrast, Germany, Sweden, and Denmark have a relatively flat tax structure after about 1.5x the median income). There is a lot of focus on tax breaks for the top 0.1%, but 90% of U.S. income is earned by people outside that group, and 80% is earned by folks outside the top 1%.

fjsolwmv 8y ago
What about health insurance? USA's privately funded health insurance is equivalent to flat or regressive tax, not a progressive tax.
- rayiner 8y ago
  Half of US health care expenditures come from the government. Medicaid is funded by general tax revenues (based on highly progressive income taxes). Medicare is funded by a flat tax with no income cap. In Germany by contrast, health care is paid for with a regressive mandatory insurance premium of 15.5% on income up to about $60,000.
vannevar 8y ago
Read it all the way to the end. Again, from the article: "Should the US system be even more progressive than it already is, bearing in mind the skewness of the pre-tax distribution, especially at the very top? Maybe it should--but a steeper tax-band schedule is a dumb way to improve fairness and raise more revenue." A progressive tax system is progressive in effect, not just in form. The author is saying that people who focus on the tax rate bands are barking up the wrong tree, because the US system already looks like one of the most progressive, even though it may actually not be.
- rayiner 8y ago
  From your quote: "Should the US system be even more progressive than it already is..." The only way to read that is as acknowledging that the system already is progressive. Indeed, according to the title of the article, it is "unusually progressive." The part about tax-band schedules is not an assertion that the system is not progressive "in effect." (That theory cannot be reconciled with the data presented in the article, which looks at taxes paid, not tax bands.) Instead the author is saying that if we want to make the system "even more progressive than it already is"--which he does not concede we should, he leaves that as a "maybe"--then we should be looking deeper than tax bands. (And he points out that the possibility of loopholes and preferential treatment does not indicate that the U.S. system is not progressive, because other countries do that too.)