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Emory Law News Center

Professor Brown on PBS: Progressive U.S. tax code is an illusion

Emory University School of Law |
Professor Dorothy Brown joined the PBS television show “Need to Know” to discuss the disparities of U.S. tax law that result in widely different penalties and tax dodging opportunities, depending on how high your income is and how it’s earned.

The show aired Friday, Jan. 11, and examined taxes paid by four New Jersey residents. They ranged from single mother Jennifer Rosado, whose earnings place her family below the poverty line, to high income Eric Schoenberg, whose income ranks him among the 1 percent of wealthiest citizens.

While the fact that 47 percent of U.S. citizens don’t pay federal income tax got a lot of play this election year, Brown pointed out the notion of them living tax-free is a fallacy in light of many other taxes they pay, such as social security, Medicare, gas and excise taxes.

Brown studies the racial implications of federal tax policy. She pointed out two-thirds of Americans take the standard deduction, while the remaining third take advantage of itemized deductions such as mortgage interest, charitable donations and a much lower rate of taxes (15 percent) on investment, or capital gain, earnings.

“The higher income the more likely you are to itemize and the more likely you are to get significant benefits out of itemized deductions,” Brown said. One major disparity is that laborers typically pay more tax than those who earn through investments.

“Need to Know” Reporter Megan Thompson illustrated the difference by comparing Schoenberg’s tax rate versus that paid by Seth Hahn, who made about $84,000 in 2010 as a labor union senior staffer. Schoenberg made $724,000, including $404,000 reaped through investments, that year. In the end, Hahn’s effective tax rate was 17.7 percent, while Schoenberg’s was 15.9 percent.

And even among middle-income earners, lifestyle choices such as being single, childless and renting rather than owning homes adversely affect how much those workers pay the Internal Revenue Service each year, Brown said.

“The tax code, I would say, comes for [wage earners] early and often,” Brown said. “And [they] should want tax reform that gets our rates lowered.”

“We have two tax systems in America,” Brown said. “One is progressive and I say that applies to most of us who are wage earners. And one is a flat rate which is a 15 percent tax on income from stock and dividends, a capital gains tax rate. If the richest among us pay the lowest tax rates, something’s wrong with this picture.”

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Watch video from the “Need to Know” show »

Read the show transcript »