Taxing The Rich: How Much Is Fair
July 15th, 2007
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Harvard economist Greg Mankiw has a very interesting take on whether the tax code is ”fair”
The C.B.O.?s most recent calculations of federal tax rates show a highly progressive system. (The numbers are based on 2004 data, but the tax code has not changed much since then.) The poorest fifth of the population, with average annual income of $15,400, pays only 4.5 percent of its income in federal taxes. The middle fifth, with income of $56,200, pays 13.9 percent. And the top fifth, with income of $207,200, pays 25.1 percent.
At the very top of the income distribution, the C.B.O. reports even higher tax rates. The richest 1 percent has average income of $1,259,700 and forks over 31.1 percent of its income to the federal government.[link]
As Mankiw points out, while economists can tell us about the distribution and its effect, fairness is best left for the society to decide. Incidentally, Mankiw maintains this fine blog and you can follow the discussion on this particular post here.
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