Emmanuel Saez on American Tax Progressivity

The fact that Emmanuel Saez won the John Bates Clark medal seems like a reasonably decent excuse to write one more time about tax progressivity. Saez is best known in the blogosphere for his work on inequality, but he has also written many papers on optimal tax theory and empirical tax history. Indeed, the JBC Medal commendation says his work has created a "resurgence of academic interest in taxation," and what that lacks in sexiness it might make up for in fact.

Saez has a paper called "How Progressive is the U.S. Federal Tax System?" (pdf), which seems like a plausible entry point for trying to answer a question that has come up a couple of times here -- like, I dunno, How progressive is the U.S. federal tax system?



The paper compares effective federal tax rates against two benchmarks: international and historical. According to Saez, here's what the American tax distribution looked like in 1960 (the y-axis is the rate and the x-axis is the income percentile):

And here's what that looked like in 2004:

And here's how it looked, compared to France and the UK, in 1970:

 And here's 2004:

Draw your own conclusions! But I'd say the federal tax structure is (a) still progressive; (b) less progressive than it was 50 years ago; and (c) less progressive when compared to the UK than it was in 1970. (France is a different matter. Based on this small amount of data the French tax code actually looks kind of terrible.)