The Agenda

David Leonhardt on the Tax Burden of the Upper-Middle-Class

David Leonhardt makes an important point, which we’ve often discussed in this space:

Such breaks are probably one reason that so many people feel as if their own taxes are such a burden: they have a sense, and not incorrectly, that others are benefiting from tax breaks unavailable to them. “If we had a simpler tax code,” said Roberton Williams of the Tax Policy Center, “people might be more accepting of what they pay.”

The group for which tax rates have fallen the least is the upper middle class: those households earning between about $75,000 and $300,000 a year. Their tax rates have declined over the past few decades, but only by a couple of percentage points.

Of course, many of the people who talk publicly about taxes — economists, policy experts, journalists — happen to fall into this group, which may be yet another reason that the public debate does not always match reality.

Many economists, policy experts, and journalists live in high-tax state and local jurisdictions. This means that they benefit disproportionately from the state and local tax deduction. Moreover, those who are renters are particularly hard-hit, which might help explain the political sensibilities of upper-middle-income voters in dense cities, for whom soak-the-1% rhetoric is particularly appealing. Overall, I suspect that the outsized influence of this group is shaping tax policy for the worse. 


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