This report is entirely the work of the Brookings Institute. The complete Report with excellent graphs: http://www.brookings.edu/opinions/2012/0413_tax_greenstone_looney.aspx
Some salient excerpts -
1. In this post we examine the progressivity of the U.S. tax code and highlight two facts: the current U.S. tax system is less progressive than the tax systems of other industrialized countries, and considerably less progressive today than it was just a few decades ago.
2. Over the last fifty years, tax rates for the wealthiest Americans have declined by 40 percent, while tax rates for average Americans have remained roughly constant.
3. This decline in tax rates for the wealthy has coincided with an increase in income inequality, where most of the wage gains have been concentrated among a relatively small portion of the American people. For example, since 1979, earnings for households in the top 1 percent of the income distribution have risen by over 250 percent. At the same time, many households at the middle and bottom of the income distribution have experienced stagnating incomes or even declines in earnings.
4. Without a doubt, the share of taxes paid by high-income individuals has increased. But the reason why the share of taxes paid by the top 10 percent has increased is because their share of income has increased.
5. In 1979, the top 1 percent of Americans earned 9.3 percent of all income in the United States and paid 15.4 percent of all federal taxes. While the share of income earned by the top 1 percent had more than doubled by 2007—to 19.4 percent—the share of federal tax liability paid by that group only increased by about 80 percent, to 28.1 percent. The share of taxes increased less for this group because high-income tax rates fell by more than the tax rates for everyone else—reductions that made the system less progressive.
6. The tax system is even less progressive when state and local taxes are factored in, because those systems tend to be regressive. For instance, families in the bottom fifth of the income distribution face state and local tax rates of 12 percent, compared to tax rates of only 8 percent for the top 1 percent of families.
Why should we care about a less progressive tax system? The evidence suggests that the causes of rising income inequality arise in large part because of changes in patterns of trade and globalization, technological advances, and other economy-wide factors. These economic changes have raised the incomes of high-skill workers and business and capital owners, but impaired or reduced the earnings of others—for reasons beyond their control. A progressive system distributes the risks of economic changes by basing a family’s tax burden on their ability to pay. Furthermore, the rise in income inequality is also reflected in rising consumption inequality, meaning that households truly are becoming more unequal as indicated by primary measures of wellbeing, such as expenditures on food.