Incredible shrinking income tax base
I’ve got a short new piece up at the Tax Foundation’s website on how expanding the base of the federal individual income tax to include all personal income—rather than just the 40 percent it now taxes—could theoretically lower the U.S.’s average effective income tax rate from 19.5 percent to just 9 percent. The punchline:
An ideal tax system is one that taxes a wide base at a low rate. Unfortunately, the current federal individual income tax system does neither. Thanks to a myriad of exclusions and preferences, the current system taxes just 40 percent of actual income in the U.S. As a result, income tax rates are more than twice as high as they could otherwise be.
Be sure to check out the fancy USA Today-style graphics.
Posted by Andrew on Wednesday September 21, 2005 | Feedback?
