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The Progressivity of the Federal Income Tax

The Tax Foundation's Andrew Lundeen and Scott Hodge have a post today at their blog, which shows just how progressive the Federal income tax really is.

Their explanation of this progressivity:

"About half of the nation’s income is reported by taxpayers who make less than $100,000, and half is reported by taxpayers who make more. However, taxpayers who make less than $100,000 collectively pay just 18 percent of all income taxes while those who make more pay over 80 percent of all income taxes. The share of income taxes paid by upper-income Americans, those who earn $200,000 or more, is twice their share of the nation’s income and accounts for more than half of all income taxes paid in 2011. Those making less than $30,000 receive more back from the IRS than they pay in income taxes due to such preferences as the Earned Income Tax Credit and the Child Credit."

The post includes a graph showing by share of income and share of taxes paid just how progressive the Federal tax code really is. Take a few moments to view the entire second edition of their chart book, Putting a Face on America's Tax Returns. Time for a flat tax or the FairTax?

Several Congressional Research Service reports on tax reform proposals are available. A review of proposals in the 111th Congress (dated March 5, 2009) includes a short comment about the Hall/Rabushka flat tax proposal. There is also an overview of tax proposals in the 112th Congress (dated October 26, 2012), In addition, there's an older, overview of flat tax proposals (dated November 17, 2000).


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