Paul L. Caron

Tuesday, January 5, 2016

New Treasury Data Shows How Progressive America's Tax Code Really Is

Tax Foundation logoScott Hodge (Tax Foundation), New Treasury Data Shows How Progressive America's Tax Code Really Is:

Recent data produced by Treasury’s Office of Tax Analysis shows that not only is the income tax very progressive, but so too is the overall tax system when we include payroll taxes, corporate income taxes, and various excise taxes.

Treasury’s data for 2015 [found here] allows us to look at two simple ways of measuring the progressivity of the tax code: the share of the total tax burden borne by families at each level of income; and, the average tax rates paid by families at each level of income.

The Treasury data is comprehensive, in that it includes all roughly 167 million families (rather than just the 145 million income tax filers) and it uses a broader “cash” measure of income that includes government transfers in addition to wages, salaries, and investment income. Treasury divides the population into deciles, or ten equal groups of 16.7 million families.


As the nearby chart shows, the average tax rates for both income taxes and all federal taxes are also very progressive, the poor have low average tax rates while the wealthy pay much higher average tax rates.

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Yes, but higher income earners still end up with more money. Until that injustice is rectified the Left will not rest.

Posted by: Mike Petrik | Jan 5, 2016 12:30:07 PM

I'd leave out the corporate income tax for looking at progressivity, since it's hard to know whether it falls on capital owners or consumers and it's easy to fiddle with to get the result you want (either that the rich pay lots of taxes, so the system is progressive, or the consumer pays all the tax, so we should abolish it as unprogressive)

Posted by: Eric Rasmusen | Jan 5, 2016 9:09:21 PM