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There’s a common myth about who pays their fair share, and who doesn’t.

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You might have heard that the poor in America barely pay any taxes. And if you look at a chart of how much every American pays in income taxes, that seems basically true. But income taxes are just one type of the many taxes we pay. So what happens if we add them all up? A new analysis by the economists Emmanuel Saez and Gabriel Zucman did exactly that. And it shows that the American tax system might not be as “progressive” as many people believe.

Read more about that analysis in an op-ed Saez and Zucman wrote for the New York Times:

All of their data, which we used to produce this video, is available on their website:

Their full research is presented in their book, the Triumph of Injustice:

And if you want to watch a bunch of economists debate this research (economists got very fired up about this!), watch this video:

But if you don’t want to watch this long debate, Vox’s Matt Yglesias explains what it’s all about:

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Comments

  1. Zoettes

    So do minimum wage workers have to pay tax in the US? I think in HK if you earn less than 500USD or some, you dont have to pay tax. And I am so relieved that here in HK, we don’t have to pay consumption tax.

  2. Gonçalo Rodrigues

    Just keep in mind, consumption taxes (except for gas taxes), in most countries (like mine, Portugal) is paid by the customer, but the seller also pays it. Supose everyone pays a fixes "consumption" tax of 10%. Imagine a producer sells a shirt to a retailer for a dollar. The retailer pays 1.10 for it, and those 0.1 the producer gets "extra" will go to the state. Now the retailer sells you the shirt for 2 dolars. U pay 2.20, and now the retailer has to take those 0.2 you gave them extra and give to the the state, minus what he paid (which is a credit of 0.1). So what actually happens is, u pay a value added tax. This makes perfect sense, cuz the difference of price the retailer bought and sold is 1 dolar, times 10% is 0.1 dollars. So the retailer pays 0.1 dollars to the state (value of shirt from 1 to 2 dollars), and the produced pays 0.1 dollars too *value of shirt from 0 to 1). Consumption and value added taxes can get tricky. It seems you are paying them, but its the retailer who is actually paying them. What happens is that, in practical terms, when value added tax rises, the company pays the tax times the value added (price sold-price bought), but what the end customer pays is price sold * tax. They make sense in the way that they do indeed make it so that the state gets exactly the tax * added value, and the companies also pay only the added value * tax, so it would make sense that the end consumer is also paying the right amount. Afterall, if the money circulates between state, company and customer, and if 2 of them pay the fair share, makes sense the 3rd is also paying the fair share

  3. Viktor Wahlberg

    I'd agree with that it's odd that payroll taxes are capped, especially seeing as social security is always talked about as a system that's running out of money. Consumption taxes seems a little less sincere though. Should the rich people ever decide to spend their money, buying themselves stuff, they would pay the same tax as everyone else… or am I missing something?

  4. Christopher Rivera

    Taxes should NOT be capped at a certain amount of money. The fact that social security is capped at $130,000 and every dollar after that cannot be taxed is ridiculous and that cuts out a significant amount to be added to the fund; Which, may I point out, has been under scrutiny for dipping into principal capital for years now. If everyone making over this threshold paid taxes on this income, it would not be running out of money. This is a simple fix…

  5. Prajwal Pramod

    No offence to Vox, but this description doesn't really make sense.

    Though rich people pay a similar percentage of their taxes as the poor and middle class, they pay way more if you consider the sheer quantity of money instead of the percentage. What's even unfair is that they pay way more money to the government for services that they use the least.

    Think about it: a rich person is much less likely to use services like Social Security, Medicaid, public schools, public trains, etc. However, the rich person pays way more for these services than a poor or middle class person.

    Correct me if I'm wrong, but to me, all of that seems a bit like socialism.

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