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October 08, 2007

SO I GUESS THE TAX CODE IS PRETTY PROGRESSIVE, THEN: Top 1% Pay More Income Tax Than Bottom 90%.

I think that degree of progressivity is actually bad. I think that everyone should pay at least some tax, and it should vary each year with how much the government spends, and should be enough to give people an incentive to care.

UPDATE: A reader emails: "The optimal tax code for the political class is one where more than 51% of the voters pay no taxes at all and where the politicians and their friends receive exemptions from most of the taxes. Explain how this differs from the current system."

ANOTHER UPDATE: A reader says the above doesn't demonstrate progressivity. But follow the link: "The linked PDF quite clearly states that the top 1% of payers pay 23.13% of their AGI, while the bottom 50% of payers pay 2.98% of theirs." That's a lot of progressivity, no? The numbers are on the last page of the PDF report. It's true, I suppose, that you could get this kind of a revenue distribution even from a flat tax if income variances were sufficiently broad, but we don't have anything like a flat tax.

MORE: Kevin Drum comments that the tax system as a whole is less progressive than the income tax. Yes, if you add in excise taxes, etc., that's certainly true. I was talking about income tax and should have been more precise. And if those other taxes followed my model -- with taxes going up and down from year to year with spending, and with individual taxpayers at all levels experiencing increases in their taxes when spending went up -- that would be a good thing, too.

Meanwhile, some of Kevin's commenters are misinformed. In fact, I've always been quite positive about the Clinton Administration's economic team. See, e.g., this post, or this one. Plus, rooting for Gene Sperling.

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