Tom Daley (Bowers, Narasky & Daley, Moraga, CA) has published Progressive? Yes. But Steeply Progressive?, 109 Tax Notes 395 (Oct. 17, 2005), also available on the Tax Analysts web site as Doc 2005-20648, 2005 TNT 200-32:
No sooner do we resolve the confusion over claims of regressivity in the federal tax system (see Tax Notes, Sept. 26, 2005, p. 1585, and Oct. 3, 2005, p. 139), than along comes a new assault on clear thinking about taxes, this time from the opposite end of the political spectrum. I refer here to the October 4 press release by Rep. Jim Saxton, R-N.J., Chair of the Joint Economic Committee. Commenting on the IRS’s newly released 2003 individual income tax return statistics, the press release announced:
The data confirm the highly progressive nature of the Federal income tax. The top 1% of tax filers paid more than one-third (34.27%) of Federal personal income taxes in 2003, while the top 10% accounted for nearly two-thirds (65.84%) of these taxes. The top half of taxpayers paid 96.54% of federal income taxes in 2003, up from 95.19% in 1993. The 3.46% share paid by the bottom half of taxpayers in 2003 compares to a 4.81% share in 1993. "These IRS data show the steeply progressive nature of the Federal income tax," Saxton said.
There you have it. Conclusive statistical proof that the U.S. income tax system is not only progressive, it is steeply progressive. Or not….
So, yes, the U.S. system is progressive. How progressive is open to debate, because measures like taxes paid as a percentage of AGI reported are blunt instruments, at best, for assessing the fairness of a tax system. However, I think it can safely be said that to characterize the tax figures in this table as "steeply" progressive is historically myopic, to put it mildly. One can only assume that this was an exercise in deliberate obfuscation on the part of Saxton, to gain political advantage, rather than genuine confusion over this elementary concept. Actually, it’s a clever tactic — straight out of Orwell on language: Reshape the way voters think about the concepts by simply redefining the words used to describe them.
Thinking about "progressive" taxation, as that term has traditionally been defined, brings to mind a closing point that has intrigued me as I have followed the tax reform debates in these pages. One of the most entertaining sections of the Tax Analysts Web site is the collection of tax returns of past U.S. presidents, vice presidents, and candidates for these offices. My personal favorite is Franklin D. Roosevelt’s 1937 Form 1040, prepared longhand by the president himself. Or I should say partially prepared. When he reached the tax calculation line, FDR found himself stymied by the math. He submitted the return with the tax amount left blank, enclosing a check covering his best guess of the amount due and a personal note of apology to IRS Commissioner Guy Helvering, requesting that the Service bill him for the difference. (There’s a lesson here for those who dream of ever simplifying the federal tax system to a point that everyone will be able to prepare his or her own tax return.)
Curious about Roosevelt’s problem in calculating his tax, I pulled a 1937 federal tax table from our library….[T]he 1937 tax table adjusted for inflation would today look something like Figure 6:
1937 Inflation-Adjusted Tax Table
Income
Tax Rate
0 – $54,400
4%
54,401 – 81,600
8%
81,601 – 108,800
9 %
108,801 – 136,000
10%
136,001 – 163,200
11%
163,201 – 190,400
12%
190,401 – 217,600
13%
217,601 – 244,800
15%
244,801 – 272,000
17%
272,001 – 299,200
19%
299,201 – 353,600
21%
353,601 – 435,200
23%
435,201 – 516,800
25%
516,801 – 598,400
28%
598,401 – 680,000
31%
680,001 – 761,600
35%
761,601 – 843,200
39%
843,201 – 924,800
43%
924,801 – 1,006,400
47%
1,006,401 – 1,008,800
51%
1,008,801 – 1,224,000
55%
1,224,001 – 1,360,000
59%
1,360,001 – 2,040,000
62%
2,040,001 – 2,720,000
64%
2,720,001 – 3,400,000
66%
3,400,001 – 4,080,000
68%
4,080,001 – 5,440,000
70%
5,440,001 – 6,800,000
72%
6,800,001 – 10,200,000
74%
10,200,001 – 13,600,000
76%
13,600,001 – 27,200,000
77%
27,200,001 – 68,000,000
78%
> $68,000,000
79%
Now that’s progressive taxation. Imagine today a special tax bracket for persons with incomes over $68 million. Since 2001 the top federal estate tax rate has kicked in for estates of $2.5 million. We stop counting today at $2.5 million for an entire estate, while the income tax tables used to go all the way up to $68 million for annual income.
