Any system that exempts some taxpayers — the poor, for instance — or some income — personal exemption — from the income tax creates de facto progressivity independently of the rate structure. —Veronique de Rugy
The United States has the most progressive income tax system among industrialized nations, says Veronique de Rugy, a senior research fellow at the non-profit Mercatus Center at George Mason University.
De Rugy’s analysis comes from data provided in a recent report by the Organization for Economic Cooperation and Development. The data shows that those in the United States making $112,124 or more contribute 45.1 percent of all income taxes—more than in any other industrialized nation and well above the OECD average of 31.6 percent.
“This data shows that focusing on a perceived lack of progressivity in the federal tax system in the United States is not only the wrong target; it will also fail to address the president's and (Occupy Wall Street) demands,” de Rugy said in an op-ed for the Washington Examiner.
Jonathan Chait, a writer for New York Magazine, disputes de Rugy’s claim.
“Our rich people pay a bigger share of total taxes because, despite their low rate, they earn so much more of the income pie,” Chait said. Top earners in the United States still have relatively low income tax rate, he wrote.
But de Rugy argues the U.S. still has a relatively progressive income tax code because the poor’s tax exemptions.
“While he’s right that the share of income paid doesn’t tell you anything about top marginal rates, he is wrong to assume that the rate structure is the proper way to measure progressivity,” De Rugy said in a response to Chait in the Washington Examiner.
“Any system that exempts some taxpayers — the poor, for instance — or some income — personal exemption — from the income tax creates de facto progressivity independently of the rate structure,” de Rugy said.
And Clive Crook, senior editor of The Atlantic, agrees with de Rugy.
“According to the OECD, rich Americans bear a bigger share of the tax burden because they earn a bigger share of the income and because the U.S. income tax system is more progressive,” Crook said.
Crook went on to say that the U.S. tax system is progressive “[n]ot because the rich face unusually high average tax rates, but because middle-income U.S. households face unusually low tax rates.”