Is the US Tax Code Really Fair? Analyzing Its Progressivity

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Understanding the Fairness of the US Tax Code

Is the U.S. tax code truly fair? A recent poll conducted by the Tax Foundation revealed that 65% of Americans do not believe so. One key reason highlighted by respondents is the perception that wealthy individuals aren't paying their fair share. This notion of fairness is closely tied to what economists refer to as 'progressivity'.

What Are Progressive and Regressive Taxes?

A progressive tax system requires higher-income individuals to pay a larger percentage of their income in taxes than those with lower incomes. In contrast, regressive taxes impose a heavier burden on lower-income earners, often leading them to pay a greater share relative to their total income.

A Closer Look at US Tax Progressivity

The U.S. tax system is characterized as progressive at the federal level. Specifically, the individual income tax operates on a tiered structure, where rates increase with higher income levels. For example, there are currently seven tax brackets ranging from 10% to 37%. As evidenced by the IRS data, the top 50% of income earners account for a staggering 97% of all federal income taxes collected, illustrating the heavy burden placed on this demographic.

The Impact of Recent Legislation on Progressivity

Despite conversations about tax reform, recent legislation, including the One Big Beautiful Bill Act (OBBBA), has largely maintained the progressive nature of the tax code. This suggests that while discussions around tax equity will continue, the fundamental structure aimed at prioritizing higher taxes for affluent earners remains intact.

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Is the US Tax Code Really Fair? Analyzing Its Progressivity

Understanding the Fairness of the US Tax Code

What Are Progressive and Regressive Taxes?

A Closer Look at US Tax Progressivity

The Impact of Recent Legislation on Progressivity

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