There is debate about what income measure should be used as a base, which deductions should be included in the comparison, and many other factors. There are many ways to measure tax progressivity, especially when comparing effective rates. A flat tax, on the other hand, gives all taxpayers the same average tax rate regardless of income, while a regressive income tax would give taxpayers lower average tax rates as their incomes increase. * Tax rate and bracket information taken from here.įor a tax to be progressive, the average tax rate paid by an individual increases as their income increases. * Income reflects May 2013 Bureau of Labor Statistics average earnings Multiple of Average Earnings at which the Top State Income Tax Rate Appliesĭifference Between Top Income Tax Rate and Marginal Rate on $25,000 of Taxable Income Progressivity and Top Marginal Rates of State Income Taxes, 2014 State Five US states have income tax codes that are more progressive than the US federal tax code. Meanwhile, on the other end of the spectrum, 31 states have income taxes that would rank alongside the three least progressive income tax codes in the OECD. We find that, using the same measure for the states as was used for the OECD, New York and California have tax codes more progressive than any OECD nation, even France or Portugal. However, state income tax structures within the United States have just as much variation, in terms of progressivity, as OECD nations' income tax structures. Yesterday, we presented data showing that the United States’ tax code is among the most progressive in the OECD when we compare Federal-level taxes, and an average value for state taxes.
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