"A few readers were surprised by my mention Thursday that the U.S. tax code, while less progressive than it may initially appear, is actually the most progressive in the developed world. But it’s true! For example, look at how big a share of the income pie the top 10 percent gets vs. what share of taxes it pays here, and then compare that to peer countries like Britain, France, Germany and Sweden:
"Our top 10 percent gets a bigger slice to start, but it also pays a much higher share of the tax burden than the upper classes in other countries do. In Sweden, generally considered the most economically egalitarian country on the planet, the rich pay taxes that are more or less exactly their share of income. These numbers are a little dated, coming as they do from a 2008 OECD report, but the point stands."
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least/It's not what you'd think: the two Anglo countries, who I think it's fair to say, have been the most conservative since 1980 are the two countries with the most progressive taxation by far. However, there's more to it than this appearance too.
"It’s easy to make the U.S. tax system sound really, almost preposterously, progressive. The Tax Foundation, for example, likes to emphasize that the top 10 percent of taxpayers paid 70.6 percent of income taxes in 2010, compared to 54.6 percent in 1986. That sure sounds like a lot!
But it’s incomplete. For one thing, you need to compare the share each group is paying of taxes to their share of income. If the top 10 percent is paying 70.6 percent of taxes and makes 70.6 percent of income, then the system isn’t actually progressive, for example. You also need to account for payroll taxes, and state and local taxes. Most states have regressive tax codes, which reduces the progressively of the overall system."
What it seems to be is that on the on ultra progressive falls apart on even closer inspection. Conservatives ignore payroll taxes-the most regressive federal taxes-and state taxes-which are quite regressive in the form of sales taxes and other consumption fees. The real key, however, is that government benefits and transfers are much more progressive in the non-Anglo Western European countries.
"Now, where this gets interesting is when you take transfers — that is, stuff like Social Security, Medicare/Medicaid, food stamps, the Earned Income Tax Credit, and other government programs designed to improve people’s standards of living — into account. Those programs, like progressive taxes, reduce inequality relative to what it would be without them. But some reduce it more than others. And even though the United States has the most progressive tax system in the world, its overall tax and transfer system reduces inequality less than those in peer countries do:
"The most redistributionist countries on the planet tend not to be those with really progressive taxes. Instead, they’re the countries that tax regressively but then direct that money overwhelmingly to poor residents."
This is striking as the progressivity of benefit and transfer payments is more or less inverse to the progressivity of taxation. So at the end of the day many are still better off if paying more regressive taxes. The success of Reaganism was in part made possible by offering non-rich taxpayers the bargain of lower absolute taxes for less generous benefits and transfers. The numbers at least call this bargain into question.
Mind you as an American liberal I'm not in any rush to raise taxes on the non-rich right now. At the least we should begin by raising taxes on the rich-we've started this process with the fiscal deal to start the year and I suspect at some point Obama will in fact secure more revenue from the GOP.
The question might be why do countries like Germany and France tax the nonrich so high? It may be the same logic as to why U.S. Social Security is taxed so repressively: to help it avoid the stigma of being "welfare" and so maintaining wide support.
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