United States
According to Congressional Budget Office estimates, the federal tax system is a progressive tax system for earners all but the richest 1% of Americans. According to the study, the lowest earning 20% of Americans (24.1 million households earning an average of $15,900 in 2005) paid an effective federal tax rate of 3.9%, when taking into account income tax, social insurance tax, and excise tax. The highest earning 5% (5.8 million households earning an average of $520,200 in 2005) paid an effective federal tax rate of 21.5%. However, the highest earning 1% of Americans (1.1 million households earning an average of $1,558,500 in 2005) paid an "effective" federal tax rate of 21.3%.
Investor and multi-billionaire Warren Buffett has criticized the US tax code as highly regressive, citing himself as anecdotal evidence: Buffett stated that with an income of over $46 million, he pays a tax rate of 17.7%, whereas his receptionist pays a tax rate of 30%.
Buffett's critique focuses on significantly lower tax rates applied to certain forms of investment income including capital gains. However, progressive or regressive taxation often must be considered as part of an overall system since tax codes have many interdependent variables.
The marriage penalty, particularly on those engaged in Shared Earning/Shared Parenting Marriage, creates a regressive tax system in the United States, so much so that economist Justin Wolfers has said that there is strong disincentive to have children within marriage or to marry at all. The National Bureau of Economic Research has also reported a study showing "that two earner couples--the horses that pull our economic plow--pay for the second job with taxes that are far beyond the well known marriage penalty."
The issue includes not only regressive tax, but also progressive benefits, where two-earner couples and single people are subsidizing one-earner/one-nonearner parent couples in a number of ways. For example, in Social security and Medicare, two-earner couples pay for their own benefits through employment taxes, while one-earner couples receive an extra, unfunded benefit of 50% or more in Social Security (a total of 150% or more) and 100% or more in Medicare (a total of 200% or more).
Read more about this topic: Regressive Tax
Famous quotes related to united states:
“It is a curious thing to be a woman in the Caribbean after you have been a woman in these United States.”
—Zora Neale Hurston (1891–1960)
“The United States themselves are essentially the greatest poem.”
—Walt Whitman (1819–1892)
“In the larger view the major forces of the depression now lie outside of the United States, and our recuperation has been retarded by the unwarranted degree of fear and apprehension created by these outside forces.”
—Herbert Hoover (1874–1964)
“Fortunately, the time has long passed when people liked to regard the United States as some kind of melting pot, taking men and women from every part of the world and converting them into standardized, homogenized Americans. We are, I think, much more mature and wise today. Just as we welcome a world of diversity, so we glory in an America of diversity—an America all the richer for the many different and distinctive strands of which it is woven.”
—Hubert H. Humphrey (1911–1978)
“Then the American flag was saluted. In general, in the United States people always salute the American flag.”
—Friedrich Dürrenmatt (1921–1990)