Thursday, January 24, 1985/The Battalion/Page 17
% ET^ FTF.
By Jim Earle
Study: low income Americans
pay large share of federal taxes
Associated Press
WASHINGTON — The share of
all taxes paid by lower-income
Americans has risen over the past
two decades, due mainly to increas
ing Social Security taxes and a de
cline in corporate levies, according
to a study released Wednesday.
Research by economist Joseph A.
Pechman of the private Brookings
Institution here found the share
paid by the the wealthiest 10 percent
of taxpayers has declined since 1966.
And while taxes have done little to
shift income among various levels of
society, Pechman wrote in a book en
titled, “Who Paid the Taxes, 1966-
85,” such government payments as
Social Security and food stamps have
“a major equalizing ef fect on the dis
tribution of income.”
Those payments have offset some
of the redistribution of wealth that
otherwise would have occurred un
der the tax system, he said.
Pechman also found a dollar of
The total tax burden has increased on the lowest one-
fifth of taxpayers, remained steady on the next-lowest
group and rose slightly for everyone else except the top
10 percent, whose tax share declined. ~~~ economist Jo
seph Pechman
wages is likely to be taxed til a higher
i ate this year than a dollar of invest
ment income because of long-term
reductions in corporate income
taxes and a reduced role for local
property taxes.
But his key finding was that the
American tax system — federal,
state and local — has become less
progressive since 1966. T he federal
income tax is generally known as
progressive — meaning that it is
based on ability to pay and that taxes
claim a larger share of each dollar as
income increases.
The Social Security tax, by con
trast, is regressive — the flat rale of
7.05 percent this year applies to the
first $S9,600 earned by every cov
ered worker.
Using what he called the most
progressive set of assumptions,
Pechman found that over the last
two decades, the total tax burden in
creased on the lowest one-»fifth of
taxpayers, remained steady on the
next-lowest group and rose slightly
for everyone else except the top 10
percent, whose tax share declined.
At the bottom income level, a f am
ily paid 16.8 percent in taxes in 1966
and will pay 21.9 percent this year.
Pechman said. At the top, the aver
age rate was 30.1 percent in 1966
and 25.3 percent this year.
The main reason for the growing
low-income burden has been the
steady increase in taxes to finance
Social Security and unemployment
compensation, Pechman said.
Individual federal income taxes at
lower earning levels also went up be
cause adjustments in the personal
exemption and standard deduction
f ailed to keep pace with inflation, he
said. Those increases outweighed re
ductions in property and corporate
income taxes, which are assumed to
be passed on at least partially to con
sumers.
At high-income levels, the overall
tax burden has declined because of
the reduction in federal income-tax
rates enacted in 1981 and the contin
uing drop in the share of taxes con
tributed by corporations, the econo
mist said.
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