SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
progressive
Why the US Tax Code Isn't Truly Progressive
The Tax Foundation is claiming that the top 1%’s share of the nation’s adjusted gross income, AGI, “fluctuates with the business cycle” while the share of the taxes these rich pay has been “generally increasing.” But, in fact, these two indicators track each other rather closely over time. By placing income share and tax share on separate graphs, the Tax Foundation obscures how close this tracking has been.
Graphed together, the obvious correspondence of these two measures becomes unmistakably clear: As the top 1%’s share of income rises, so does the top 1%’s share of taxes. In other words, the increase in the tax dollars these rich are paying largely reflects the larger slice of total national income these rich are pocketing, not that the tax system has somehow become meaningfully more progressive. The top 1% tax share is rising because the top 1% income share is rising, not because our most affluent are facing a heavier tax burden on their gains.
A truly progressive system should meaningfully reduce inequality by redistributing income and wealth and curbing the concentration of economic power at the top. By that standard, the US tax system falls short.
By characterizing the top 1%’s income share as “fluctuating with the business cycle” while characterizing its tax share as “generally increasing”—and separating the graphic presentation of these two trends—the Tax Foundation is playing fast and loose with our core tax reality.
The time frame of the Tax Foundation’s analysis further muddies the waters. By starting in 2001, the Tax Foundation misses the longer arc of rising inequality in the United States. Looking back to the 1980s, the trend is unmistakable: The top 1%’s share of income has climbed substantially, from 11.3% in 1986 to 20.6% in 2023. The tax share of these rich has risen as well, from 25.8% in 1986 to 38.4% in 2023. Meanwhile their average effective tax rate has actually declined over the same period, from 33.1% to 26.3%, according to IRS data.
Even more importantly, focusing solely on income ignores the explosion of wealth at the top. Adjusted gross income (AGI) itself is a limited and often misleading measure—an arbitrary definition used for tax purposes that fails to capture total economic income, and completely misses the scale of wealth accumulation. Over the past several decades, our nation’s richest households have accumulated an outsized share of the nation’s wealth, with that wealth share far outpacing the top 1%'s growing share of national income. Yet the tax system does relatively little to address this imbalance.
Wealth remains lightly taxed compared to income, and many forms of capital income, to make matters worse, enjoy low preferential tax rates or taxes that can be deferred indefinitely. The end result: The overall tax burden on America’s richest is failing to keep pace with their expanding economic power.
The distortions become even clearer when we look beyond the top 1% to the tippy top of our wealth distribution, the top 0.01%. These ultra-wealthy households have seen extraordinary gains in both income and wealth over time. But their tax contributions have not kept up proportionally.
An Institute for Policy Studies analysis of data collected by economists Emmanuel Saez and Gabriel Zucman shows that our top 0.01% more than tripled their share of the nation’s wealth between 1962 and 2018. Yet their share of US taxes paid in 2018 hovered only slightly higher than their share of taxes paid in 1962.
All of this raises a fundamental question: What makes a tax system “progressive”? Just somewhat higher tax rates on higher earners? No. A truly progressive system should meaningfully reduce inequality by redistributing income and wealth and curbing the concentration of economic power at the top. By that standard, the US tax system falls short.
Our current tax system largely mirrors our nation’s underlying distribution of income rather than reshaping that distribution. The rich pay more because they have more. But they don’t pay more at levels sufficient to counterbalance their outsized gains. In 2023, the top 1% captured about 20.6% of pre-tax income and still held roughly 17.7% after federal income taxes, only a modest reduction. That after-tax share is still higher than their 17.4% share of pre-tax income in 2001, underscoring how little the tax system has done to curb the growing concentration of income at the top.
Reversing these trends will require more than modest tweaks to the tax code. It will take a more ambitious approach, one that directly addresses both income and wealth concentration at the very top. Until then, claims that the tax system is adequately progressive risk obscuring a deeper reality: Inequality continues to widen, and the tax code is doing too little to stop it.
GOP Target Voting Rights Because They Recognize the Future Is Progressive
In Wisconsin, Janet Protasiewicz, a liberal Milwaukee County judge, won a high-stakes race for a seat on the state’s Supreme Court.
A progressive now holds the mayor’s office in Los Angeles, and progressives compose a majority on the board of aldermen in St. Louis.
Progressives have swept into statehouses in Colorado, Connecticut, and Wisconsin (where two Democratic Socialists this year revived a socialist caucus inactive since the 1930s).
John Fetterman successfully campaigned for Senate in Pennsylvania. In Virginia, progressive Jennifer McClellan became the first Black woman to represent the state in Congress. The House’s Congressional Progressive Caucus has added 16 new members, bringing the total number of the organization to 102. It is now among the largest caucuses in Congress.
These newly elected progressives view America’s widening inequalities of income and wealth as dangerous. They believe government has no business forcing women to give birth or telling consenting adults how to conduct the most intimate aspects of their lives. They want to limit access to guns. They see climate change is an existential threat to the nation and the world. They want to act against systemic racism. They want to protect American democracy from authoritarianism.
***
The bigger news is that these progressive leaders couldn’t have gotten to where they are without a fundamental transformation occurring in America: Voters who also believe these things are rapidly becoming the majority.
First, consider the age of people who believe these things — including the huge millennial generation now in their late 20s to early 40s.
According to a recent analysis by the Financial Times, if millennials were following previous trends, someone who is now 35 years old would be about 5 percentage points less conservative than the national average and would gradually become more conservative as they aged.
But, in fact, millennials are 15 points less conservative. Today’s 35-year-olds are the most progressive cohort of 35-year-olds in recent history.
Why? Millennials have faced an inequitable economic system, a runaway climate crisis, and the herculean costs of trying to have a family — including everything from unaffordable child care to wildly unaffordable housing. They’re demanding a more equitable and sustainable society because they desperately need one.
***
Next, consider women. Young women have become significantly more liberal over the past decade — while the political identity of young men has remained largely unchanged (see chart, below).
Young Women Are Much More Liberal Than Young Men
(Source: Gallup Poll Social Services)
Part of this is the result of anger over abortion rights, but the trend started before the Supreme Court reversed Roe v. Wade.
Researchers point to diverging views about societal change, with young women more likely than young men to support fluidity over gender identity and sexual preference, LGBTQ rights, children having gay or lesbian parents, men staying home with children, and women serving in the military. Young women are also more likely to loathe Donald Trump and any politician who emulates him.
Over the next two decades, these women will be moving into positions of power and leadership. That’s especially likely in that women now compose a remarkable 60 percent of college undergraduates.
***
Next, look at the growing percentage of Americans who are (or who consider themselves) people of color.
The United States is projected to become a majority-minority nation sometime between 2041 and 2046 (depending on the amount of net immigration into the U.S., birth/death rates, and intermarriage rates over the preceding years).
By 2050, the Census Bureau projects that the number of white people in America will be falling, the number of Black people will have grown by roughly 30 percent, the number of Latinos will have risen by 60 percent, and the number of Asian Americans will have more than doubled.
Not all these people believe in all the progressive values I mentioned above, of course. A sizable share of Black voters are uneasy with LGBTQ rights. Some Latino voters —specially those who fled Cuba during the Castro regime — reject socialism. (Biden won Latino voters by a 59 to 38 percent margin, yet that was a net 17-point decline from Hillary Clinton’s 66 to 28 percent victory in 2016.)
Overall, people of color are deeply concerned about the nation’s widening inequalities. They’re committed to social justice. They want to act against systemic racism, and they want to protect American democracy.
***
Finally, consider college graduates, who are overwhelmingly more liberal and progressive than non-college grads.
Republicans argue this trend has been offset by people without college degrees, who have become more conservative. True, but irrelevant.
Here again, look at the trend. Over a third of Americans now have a college degree, double the percentage in 1980. If the trend continues — and given the demands for educated workers in an ever-more-complex economy, that seems likely — by 2040, a majority of Americans will have college degrees.
***
All these trends point to a new progressive America — in about 20 years.
Twenty years is a long time, of course. These trends have already ignited an anti-democracy backlash — especially from Americans who are older, whiter, straighter, without college degrees, and mostly male — that is, from people susceptible to authoritarian strongmen peddling conspiracy theories and stoking hatred.
The Republican Party knows it’s doomed unless it radically restricts voting, or goes full throttle and wholly adopts Trumpian fascism.
So, my friends, the stakes ahead could not be higher.
Most Popular