Wednesday, March 23, 2011

Progressively Taxing Debate

Overtaxed, an economist meant,
Are America's top ten percent,
But his figures, while true,
Don't progressively view
The top tent' o' da tent' o' da tent'.

The Tax Foundation, a Washington-based think tank, concluded based on figures  published by the OECD that "no country leans on upper-income households as much as the US."  They based this conclusion on the fact that the income tax share of the top-earning 10% of US households is 1.35 times its income share, compared to the OECD average of 1.11 times.  However... the OECD economist behind the Tax Foundation's figures points out that the overall level of taxes and social spending in such countries as Sweden is far higher than in the US, resulting in more income equality there than here.  Moreover, a UC Berkeley study showed that the average tax rate actually paid by the US' top-earning 0.1% (where wealth is really concentrated) has declined from 65% in 1970, to 45% in 1994, to less than 35% in 2004.  

Hat tip to Harvard's Professor Greg Mankiw, who linked to the Tax Foundation on his blog and became the lightning rod for progressive criticisms such as this one.

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