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“How Progressive is the U.S. Federal Tax System? A Historical and International Perspective” Thomas Piketty- Economics Professor, Paris Emmanuel Saez-

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Presentation on theme: "“How Progressive is the U.S. Federal Tax System? A Historical and International Perspective” Thomas Piketty- Economics Professor, Paris Emmanuel Saez-"— Presentation transcript:

1 “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective” Thomas Piketty- Economics Professor, Paris Emmanuel Saez- Economics Professor, Berkley National Bureau of Economic Research

2 Flat tax BaseRateTaxes 10,00020%2,000 50,00030%15, ,00040%40,000 BaseRateTaxes 10,00030%3,000 50,00030%15, ,00030%30,000 Progressive Tax

3 What does that mean for income distribution? Flat TaxProgressive Tax

4 Why not a flat tax? Does a CEO deserve their income less than a minimum-wage employee? – Irrelevant Reasons -Portion is undeserved rent (Land ownership) -Income inequality leads to crime/murder -As income rises, need for that income drops -Gov. must tax where the wealth is *Roughly 20 economically weak countries have a flat tax

5 What makes our system progressive Taxable Income Tax Bracket $0-$8,50010% $8,500- $34,500 15% $34,500- $83,600 25% $83,600- $174,400 28% $174,400- $379,150 33% $379,150+35% + FROM the RICH Estate Taxes Capital Gain Taxes Tax credit limitations TO the POOR Welfare Social Security Other Gov. Programs

6 2004 Income Groups Pre-tax Income Share Post-Tax income share P P P P P P P Income Groups Pre-tax Income Share Post-Tax income share P P P P P P P

7 Change 1. Dramatic reduction in rates 2. Corporations paying half the taxes they did in the 60’s 3. Payroll taxes substantially larger… BUT only incomes over 106,800 are effected.

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9 Conclusion Other developed countries are far more progressive – UK/France Most dramatic changes occur within top 1% of earners – Tax system is being shaped by the wealthy Progress Taxation has declined dramatically since the 60’s – Top earners used to pay over 70% of income in Taxes


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