Saturday, September 24, 2011

Tax Progressivity

According to this article at the Wall Street Journal, I'm not the only one who thinks that the U.S. has a progressive tax system.  They cite a study by the OECD.  Some might accuse the WSJ of right wing bias, so I think I will have to look into this.

According to this study, the U.S. reduced inequality less than other countries when taxes and transfers were taken into account, but more of this was due to taxes.  Thus the taxes are indeed more progressive in the U.S. than other countries, but because the U.S. has less in the way of transfers, the U.S. had less of an impact on inequality when both of these are taken into account.  This was the case as of the late nineties.  This was compared to Sweden, Denmark and Canada.  Actually Sweden and Denmark had mildly regressive taxation that was counteracted by larger transfers.

It doesn't look like I found the same study.  It is too bad that articles don't contain quick links so that we can check the sources.  The article in the WSJ was talking about a comparison of 23 different countries done in 2008.  This study was indeed from 2008, but seems mostly concerned with making suggestions for the tax system of Canada.  What it said seems to be consistent with what the WSJ was claiming that the other study said, however.

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