NCPA - National Center for Policy Analysis

More Than Dividends are Double Taxed

January 21, 2003

Aside from the double taxation of dividends, the U.S. tax code imposes multiple taxes on Americans in a number of other ways -- and those taxes fall most heavily on lower-income families, experts report.

  • Sales, import, payroll and other taxes impose a double, triple and even a quintuple burden on taxpayers.
  • Elimination of the double taxation of corporate dividends would benefit about 54 million Americans, leaving the remaining 236 million still subjected to multiple taxations stemming from import tariffs, sales taxes and federal and state excise taxes that add to the prices of products.
  • Low earners spend a larger share of their income on alcohol, gasoline and tobacco -- as well as inexpensive imported textiles and manufactured goods than high earners do.
  • Property taxes are also a form of double taxation, since they are levied on assets bought with income that has already been taxed -- and this is particularly true of the estate tax.
One can also add payroll taxes for Social Security as a form of multiple taxation.

Studies have shown that when all taxes are taken into account, the tax burden -- as a percentage of pretax income -- is roughly the same for all income groups. A family in the bottom 20th percentile pays 18 percent of its income in taxes, or an average of $1,449. Those in the second 20th percentile pay out 14 percent of income, or an average of $2,847. The percentages then begin to rise -- ending at 19 percent of income in families earning in the top 20th percentile.

This reflects the regressive, and hidden, nature of multiple taxations throughout the tax structure.

Source: Daniel Altman, "Doubling Up of Taxation Isn't Limited to Dividends," New York Times, January 21, 2003.


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