Lecture 19 POLS 207Outline of Last Lecture:Who Bears a Tax Burden? I. Types of taxesA. IncomeB. ConsumptionC. Real propertyII. Tax level v. Tax burdenIII. Types of tax systems (VERY IMPORTANT to understand for the test!)A. RegressiveB. ProgressiveC. Proportional/Neutral Outline of Current Lecture:Income InequalityI. Definitions of incomeA. Pre-taxB. Post-transferC. Money incomeII. Increasing income inequality since the 1960sCurrent Lecture: Brief tangent on the “distribution of income” (This provides us with a “data template” for thetax system) How do we figure out what part of the population is getting what percentage of income?“Who Pays:” Institute on Taxation and Economic Policy The “Who Pays” study looks only at non-elderly households (See Neo slides) How do you define income? Different categories of “income”: Pre-tax (how much income is flowing into different income categories (quartiles, quintiles, etc.) based on gross income before any kind of taxes or fees), post-transfer (Meaning the money cancome from anywhere – wages, social security checks, whatever), money income (Physical money as opposed to other sources of income such as food stamps, government housing, etc.)Income data for 2000 There is more income equality among top 20% than there is in lower income brackets Census Bureau’s definition of income: pre-tax, post-transfer, money incomeAlternative explanations for INCREASING income inequality since late 1960s…NOTE: Slow DECLINE between 1930s – 1960s…They range from denial to explanations that focus on how we measure, e.g. “income” to some “demographic” changes to “globalization” pressures on wages to an increasing “education” premium (the concept that those with an education make a better salary than those without an education) to government tax policies rewarding “investors” over
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