One Thing's for Certain

I ran a cross a few infographics recently, while surfing the web because it was too snowy outside to do anything, and I was avoiding doing my own taxes, so I looked at everyone else’s.

The US federal budget, showing the inflows and outflows, broken down into several categories. One thing struck me: income tax revenue is only slightly larger than payroll tax revenue. In many political arguments about tax cuts, it’s only income tax that is mentioned, and the income tax burden is touted. But that’s missing half of the picture, because the payroll taxes are regressive; there are people who pay no income tax but pay a significant fraction of their income in payroll taxes, and are not helped by income tax cuts.

So if you analyze the tax burden incorporating the payroll taxes (as well as state and local taxes), what does the picture look like? It’s only slightly progressive — not the portrayal of woe that some would have you believe.