Regressive vs. Progressive Taxation. From the NYT, September 17, 2020.
IDEA OF THE DAY: THE ‘FAIR TAX’ |
Many states have tax systems that are regressive: They take a greater share of income from the poor than the rich. And because a disproportionate share of the richest taxpayers are white, these state tax systems also widen racial wealth gaps. |
In Illinois, for example, the lowest-earning fifth of the population pays 14.4 percent of its income in state and local taxes, according to a new study by the Institute on Taxation and Economic Policy. The middle-earning fifth pays 12.6. The highest-earning 1 percent of residents pays 7.4 percent. |
This year, Illinoisans will vote on whether to change this system, through a constitutional amendment to authorize a more progressive tax, called the Fair Tax. It would cut taxes for the 97 percent of residents who make less than $250,000 in taxable income — and raise taxes for the remaining 3 percent, according to the study. If the Fair Tax had been in place over the past two decades, it would have effectively transferred $50 billion in wealth from this richest 3 percent to everyone else. |
