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Who Practices Price Discrimination?

August 6, 2008

Russ Roberts links to the following data on taxes in the US (see Table 1). In brief, the top 1% pays 40% of all income tax and the bottom 50% pays less then 3%. Now, the bottom 50% also only earns less than 32K. A slightly more impressive way to put it is that 90% of the people, those earning up to 110K, pay less than 30% of all income taxes. In other words, government charges different prices to different people.

Immigrants often end up with dual citizenships and in rare occasions some of them can decide in which country to pay taxes. If the law didn’t prohibit this and people were allowed to accumulate citizenships, we would start to see more competition between jurisdictions and maybe less discriminatory tax systems. In that vein, I wonder if single US states tax people more uniformly than the federal government.

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