Tax Code Is Most Progressive in Decades
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Despite claims that rising incomes of the top 1 percent are the result of tax cuts for the wealthy, the tax code is actually at its most progressive level in the last 35 years, says Scott A. Hodge, president of the Tax Foundation.
The largest growth in progressivity has been in the income tax, which is almost twice as progressive today as it was at the end of the Carter administration.
The chart shows that tax progressivity did decline after the 1981 tax cuts, which lowered the top marginal tax rate from 70 percent to 50 percent. However, progressivity jumped following the passage of the Tax Reform Act of 1986 and has grown steadily ever since.
Tax credits temporarily provide relief to low-income families. However, using higher tax rates to redistribute income ultimately hurts, rather than helps, the poor because it undercuts the factors that increase standards of living and economic growth.
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