Taxing the Mind

Ezra Klein via Just One Minute via Instapundit:

Income taxes do tilt upward. But they're the progressive bit of the federal tax wedge. Other federal taxes, like the payroll tax and the excise tax, are not progressive. (And we're not even going to get into state income, which are frequently regressive) That's why CBO calculates something called the "effective federal tax rate." The EFTR is simply a households’ federal tax liability divided by its income.

I find it a useful measure. Again, by definition, it tells us what percentage of one's total income is paid to the government as federal tax.

Klein, however, is not clear on the concept:

When you look at percentage of total tax liabilities, the rich do in fact bear a heavier burden. But it's because they have so much more money. They are not bearing a heavier burden as a percentage of their incomes.

D'oh!

Comments

[Roy Lofquist]

Isaac,

I actually, at one time, worked with your namesake's wave equation. Long time ago.

I must be really slipping because I didn't understand wtf he's talking about. Is it me?

Roy

[Mike T]

After a fashion, he's correct in that someone who makes $1M/year and pays 50% is still incredibly wealthy after their taxes, whereas 28% on an income of $100k is, in many regions, a devastating loss of purchasing power.