The Economist highlights that while the narrative suggests the rich are not taxed, in reality, tax systems in developed economies have become more progressive over the past few decades, effectively reducing post-tax income inequality.
The article from the Economist challenges the popular belief that wealthy individuals escape taxation by revealing the complexities of modern tax systems in developed nations. Contrary to the narrative that tax policies favor the rich, the piece argues that tax systems are more progressive than they were three decades ago. While income inequality has worsened before taxes, these systems have effectively limited it post-tax in many countries.
The discussion shifts from whether the rich are taxed to how much they actually pay, who contributes, and who manages to evade taxes. For instance, the comparison of income distribution before and after taxation shows that wealth redistribution efforts have intensified compared to the 1960s. Specifically, in the United States, tax redistribution is nearly double what it was decades ago.
In other developed nations like the UK, France, Canada, and Japan, tax and social systems have seen greater progressiveness since the 1990s. Furthermore, on average, the G7 countries have experienced a slight decrease in post-tax inequality over recent years, indicating a shift towards more equitable income distribution post-taxation.
