Blog of the Century

Graph: How Progressive Is the Tax Code, Really?

Blog Post by: Benjamin Landy, on September 19, 2012

Many gallons of ink (and millions of pixels) already have been spilled decrying Mitt Romney's latest Randian diatribe—captured in a secret video of the candidate talking to a group of wealthy donors—that characterizes the 47 percent of Americans who didn't pay federal income tax last year as "dependent upon government" and "victims," incapable of "[taking] personal responsibility and care for their lives."

Members of the progressive blogosphere, particularly Ezra Klein's Wonkblog team (see here, here, and here), have done an admirable job debunking this myth. The gist of the objection isn't that Romney's claim was untrue—indeed, about 47 percent of Americans had their entire federal income tax liability wiped out last year, thanks in part to tax breaks and deductions passed by Republicans under George W. Bush. The issue is that Romney was cherry-picking the most progressive of all the taxes that Americans pay.

The fact is, nearly every American pays taxes in one form or another. Of the 47 percent who paid no income tax in 2011, 61 percent were employed and paid payroll taxes, which are highly regressive. The remainder were either elderly, disabled or unemployed. But even these deadbeats paid taxes: sales tax, state and local tax, excise tax.

When you add all of these up, what you get is a tax code not of "makers and takers," as Republican rhetoric suggests, but one in which each income group's share of total taxes is roughly the same as their share of before-tax income. (I've included government transfers as income in the graph above, lest commenters think this analysis unfair.) It's a progressive system, yes, but hardly the Marxist dystopia that Romney appears to have in mind.