Director of Federal Fiscal Policy
As we have explained, the joint congressional “supercommittee” — and any future efforts at deficit reduction — should raise significant revenues, and do so progressively. A recent Congressional Budget Office (CBO) report highlights why.
It shows not only that income inequality has dramatically increased in recent decades (a point that we have previously discussed), but also that “the increase in inequality of after-tax income was greater than the increase in inequality of before-tax income.” That is, the federal tax system as a whole did less to equalize the distribution of income in 2007 than it did in 1979.
There are three reasons why:
Given how extreme inequality has become, Congress needs to reverse course and make the tax code more progressive.