TY - JOUR
T1 - Comparing the top and the bottom income earners
T2 - Distribution of income and taxes in the United States
AU - Iyer, Govind S.
AU - Jimenez, Peggy
AU - Reckers, Philip
PY - 2012/3/1
Y1 - 2012/3/1
N2 - Tax reform is again at the center stage as Congress grapples with ideas to reduce the US budget deficit and the country readies itself for another election year. Given this unusually charged tax reform season, populist and party rhetoric appears to the general population to have largely replaced reasoned debate as politicians, economists and pundits " cherry pick" facts to justify their claims. Our contribution to the current debate on tax equity is that this is one of the very few studies that jointly consider the impact of payroll . and income taxes. Most tax equity studies focus only on the federal income tax and as such issue misleading implications. It is important to jointly consider payroll and income taxes because (a) for taxpayers in lower income ranges, the payroll tax burden outweighs the income tax burden, while (b) for higher income taxpayers income from wages above $106,800 ($110,000 in 2012) are payroll-tax free, and (c) other sources of income, namely dividends and capital gains, are not subject to payroll taxes at all. Thus, we provide a more comprehensive picture of the overall progressivity (or lack thereof) exhibited by the current tax laws. In addition, we also consider how some often-raised tax proposals would prospectively affect income inequality and tax progressivity.
AB - Tax reform is again at the center stage as Congress grapples with ideas to reduce the US budget deficit and the country readies itself for another election year. Given this unusually charged tax reform season, populist and party rhetoric appears to the general population to have largely replaced reasoned debate as politicians, economists and pundits " cherry pick" facts to justify their claims. Our contribution to the current debate on tax equity is that this is one of the very few studies that jointly consider the impact of payroll . and income taxes. Most tax equity studies focus only on the federal income tax and as such issue misleading implications. It is important to jointly consider payroll and income taxes because (a) for taxpayers in lower income ranges, the payroll tax burden outweighs the income tax burden, while (b) for higher income taxpayers income from wages above $106,800 ($110,000 in 2012) are payroll-tax free, and (c) other sources of income, namely dividends and capital gains, are not subject to payroll taxes at all. Thus, we provide a more comprehensive picture of the overall progressivity (or lack thereof) exhibited by the current tax laws. In addition, we also consider how some often-raised tax proposals would prospectively affect income inequality and tax progressivity.
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U2 - 10.1016/j.jaccpubpol.2012.02.001
DO - 10.1016/j.jaccpubpol.2012.02.001
M3 - Article
AN - SCOPUS:84859266791
SN - 0278-4254
VL - 31
SP - 226
EP - 234
JO - Journal of Accounting and Public Policy
JF - Journal of Accounting and Public Policy
IS - 2
ER -