General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsGraphs: How regressive is the US tax system? & Income tax rates over time by income group.
It's not surprising that the US' tax system is the most regressive in the developed world. What is surprising is that an economic powerhouse like Germany has the most progressive tax structure in the developed world (at least among those countries shown. I suspect that the Scandanavian countries have even more progressive tax structures.)
In the last 30 years the top 1% have seen their incomes skyrocket while their tax rates have fallen be a huge amount.
Tax rates have fallen dramatically for the top %1 - particularly for the top .1% - (aside from an uptick in the 1990's) since the mid-1070's.
The experience of Germany shows that a progressive tax structure that contributes to a very equitable distribution of income is not inconsistent with a strong economy, strong unions and a strong middle class. Conversely our experience shows that a regressive tax structure that contributes to a very inequitable distribution of income is inconsistent with a strong economy, strong unions and a strong middle class.
JHB
(37,162 posts)The early 1990's uptick was due to adding a 31% bracket in 91 and 36% and 39% brackets in 93.
Notice the upper group in the 60's and 70's: near 60% even though the top marginal rate was 91% until '64, when it went to 77%, then to 70% until 82. In 82 it was dropped to 50%, then to 38.5% for 87, and 28% from 88-90.
A while back I posted graphs of the inflation-adjusted tax bracket thresholds (not the rates themselves, just the breakpoints between different rates). In addition to lowering rates, the Reaganites collapsed the progressive structure, reducing the number of brackets and sharply limiting how high they reached.
http://www.democraticunderground.com/1002400229
pampango
(24,692 posts)JHB
(37,162 posts)e.g.:
pampango
(24,692 posts)According to the constant refrain from Republicans in Congress, the reason that tax rates cant be raised on anyone, even the already super-wealthy, is because doing so will hurt economic growth. However, two prominent economists Nobel Prize winner Peter Diamond and John Bates Clark award winner Emmanuel Saez write in todays Wall Street Journal that the conservative theory is basically bunk:
Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.
Saez and Diamond also note that growth can be boosted if the revenue raised from higher taxes gets spend on infrastructure or other public investments. The neglect of public investment over the last few decades suggests that the returns could be quite high, they wrote.
As this chart shows, job growth has been weakest when the top tax rate was at its lowest:
In fact, job growth has been stronger when taxes are higher overall:
http://thinkprogress.org/economy/2012/04/24/469864/economists-higher-tax-rate-growth/