Income tax aside, do the burdens of other major tax sources fall evenly on taxpayers?
By Lisa Freedland
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NO
Aside from income taxes, Americans pay a variety of other taxes. These broad taxes tend to impose higher relative burdens at lower incomes. So income taxes are often the main policy focus in discussions of economic inequality and overall fairness.
- Federal Social Security taxes take a flat percentage of wages up to a fixed level of income ($142,800 in 2021).
- Most forms of sales tax and excise taxes (such as tobacco taxes) are regressive, as lower-income earners spend more of their income on consumption than higher-income households.
- While property taxes are considered fairly efficient, some researchers find that the system nonetheless tends to favor wealthier owners (who may own multiple expensive properties) for a variety of reasons. “Many properties aren’t properly assessed,” one analyst observes, as less expensive property in poor neighborhoods is often taxed at relatively higher rates.
This fact brief is responsive to conversations such as this one.
Sources
Tax Policy Center Are federal taxes progressive?
AccurateTax Why is sales tax considered a regressive tax?
Arnold Ventures Property taxes rob from the poor, give breaks to the rich
Center for Budget and Policy Priorities Improved state taxes on wealth, high incomes can help fuel an equitable recovery
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