Progressive Taxation or Punishment?
By Saad Asad
The American Taxpayer Relief Act, passed to divert the recent fiscal cliff, distributes most of the prescribed tax hikes towards the wealthy, though the lower class taxpayers do not go by unscathed. Due to the capital gains and dividends tax increases, in particular, the top 1% alone will be subject to over 40% of the increases. Because of the lapse of the payroll tax cut, middle class families will also face a tax increase in 2013 as well. I used data provided by the Tax Policy Center to illustrate the tax change from 2012 to 2013 in chart form. By dividing up the top quintile, we can see that the top 1% pay most of the increased burden compared to the other 19% in the top quintile. Depending on one’s political beliefs, this is a move towards progressive taxation or punishment for the rich.