Liberal group: U.S. does little to combat income inequality

A left-leaning group is pushing back on the idea that the U.S. has one of the most progressive tax systems in the world.

{mosads}GOP lawmakers and conservatives have long touted that idea, citing a 2008 study from the Organization for Economic Cooperation and Development.

But the Center on Budget and Policy Priorities said those claims distort that study’s findings, arguing that the U.S. also does less than other industrialized countries to battle income inequality.

“Why does the U.S. tax and cash transfer system do relatively little to reduce inequality in household cash incomes, despite the progressivity of the U.S. tax system?” wrote the paper’s authors, Chye-Ching Huang and Nathaniel Frentz. “The answer is that tax progressivity by itself gives an incomplete picture of how much taxes and cash transfers reduce inequality.”

The new CBPP report comes as Democrats have been making income inequality a key part of their political message this midterm election year.

CBPP argues that the U.S. tax system collects less revenue per household than other OECD countries, even if it is comparatively progressive. Plus, the group argues that the U.S. spends far less – roughly half the OECD average – on services like unemployment insurance and Social Security.