ADVANTAGES

As we've seen, taxes don't have much impact on the income distribution, especially when we look at the top 1% or top 0.1%. Nor do various kinds of tax breaks and loopholes have much impact on the income distribution overall. That's because the tax deductions that help those with lower incomes -- such as the Earned Income Tax Credit (EITC), tax forgiveness for low-income earners on Social Security, and tax deductions for dependent children -- are offset by the breaks for high-income earners (for example: dividends and capital gains are only taxed at a rate of 15%; there's no tax on the interest earned from state and municipal bonds; and 20% of the tax deductions taken for dependent children actually go to people earning over $100,000 a year).

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