How Progressive is the U.S. Federal Tax System? A Historical and International Perspective

Thomas Piketty and Emmanuel Saez

No 12404, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides estimates of federal tax rates by income groups in the United States since 1960, with special emphasis on very top income groups. We include individual and corporate income taxes, payroll taxes, and estate and gift taxes. The progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s. This dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income. The sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity. International comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity, both for time trends and for cross-country comparisons. The pattern for the United Kingdom is similar to the US pattern. France had less progressive taxes than the US or UK in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the US or the UK.

JEL-codes: H2 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-acc, nep-his, nep-pbe and nep-pub
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Thomas Piketty & Emmanuel Saez, 2007. "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 3-24, Winter.

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Related works:
Journal Article: How Progressive is the U.S. Federal Tax System? A Historical and International Perspective (2007)
Working Paper: How progressive is the US federal tax system? A historical and international perspective (2007)
Working Paper: How progressive is the US federal tax system? A historical and international perspective (2007)
Working Paper: How Progessive is the US Federal Tax System? An Historical and International Perspective (2006)
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