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Is US Tax Policy Really Progressive?

Originally published at Unrhetorical.

An article in this week’s issue of The Economist compared tax policies across a number of countries. Specifically, the article looked at the way countries’ tax revenues were sourced from income, consumption, and property taxes.

Apparently, the US is the only industrial country without a VAT (value added tax) on products. The Economist claims this is an extremely efficient tax for generating revenues without deterring jobs; however, the burden “falls disproportionately on poorer people who spend a higher share of their income than richer folk.” As a result, The Economist stated:

Thanks to its reliance on income taxes, America—by some measures—has the most progressive tax system in the OECD.

I’m not entirely familiar with the economics of this discussion but I was definitely surprised by the statement. I knew that US income tax is progressive, but I never think of the US as having a generally progressive tax policy. I imagine my biases are based on comparing welfare policies instead, which would likely blind most people to this idea.

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