Thursday, April 12, 2012

The increasingly regressive US tax system

First of all, most US taxes are regressive. Municipal property tax and sales tax are flat and have limited impact on the affluent.

The cap on Social Security tax has been around since the inception of the programs and this tax has primarily been on the back of the middle class while private pensions have been disappearing from the workplace, Only 20 per cent of working Americans retire with a pension.

Then we have the special tax deals for the affluent. Most wealthy people don't work for a living and therefore don't pay income tax. These people benefit from capital gains an deferred interest that has a 15 per cent flat tax on it, far blow the average income tax rate that most Americans pay.

Think corporate taxes are too high? This is another GOP exaggeration.

Many corporation have off shored in the Netherlands or Ireland and pay a low corporate tax rate to those countries. The effective corporate tax rate in the US is 17.5 per cent, again well below what the average income tax that Americans pay.

The US has a regressive ta system courtesy of the GOP and supply side economics.
Besides being inherently unfair, the present tax system has been a big factor in the US deficit.

When the GOP holds the presidency, the deficit is rarely discussed. It only becomes an issue when a Democrat is in the White House.

Subscribe to the Rightardia feed:

Creative Commons License

Rightardia by Rightard Whitey of Rightardia is licensed under a Creative Commons Attribution 3.0 Unported License.

Permissions beyond the scope of this license may be available at


WiseFather said...

A flat tax? It sure does sound fair: Everyone pays the same tax rate. It takes just a little bit of thinking to figure out it does not work out so fairly in practice. I guess that’s what they are counting on. It is easy to say a flat tax is a good idea. Explaining how it is a scam takes many more words. Some of those words, including the Seinfeld haircut analogy can be found at this post:

Rightardia said...

I cross posted the haircut article on Rightadia. that is a good analogy for explaining flat taxes.