It primarily funds Social Security. How is that part of "our wacky welfare system?" If you consider it a secondary income tax, then it really shows how regressive our tax system is since the rich don't pay the same rate.
It’s a tiny portion of federal revenue, which as pointed out and cited is predominantly funded by income tax. It also doesn’t straightforwardly find Social Security. It funds a portion of pay outs to current recipients, something like ~90%, with the rest coming from general funds. That portion is decreasing as demographics shift. It’s sort of a weird cash transfer program that’s presented as some sort of lock box. We could lift the cap to make SS more solvent past the 2040s, but it would still be a small portion of federal revenue compared to income tax which is highly progressive.
I don’t understand how you’re even arguing that income tax isn’t highly progressive here, every tax expert and economist disagrees with you. It’s just basic accounting. Most federal revenue is from income tax and most of it comes from the top quintile of income earners.
"tiny portion of federal revenue?" It's 36% of all Federal revenue. It used to constitute almost 80% of Federal revenue in the 40's/50's, but the cap has made its contributions drop.
The Federal income tax is progressive, but only if you ignore that the payroll taxes are highly regressive income taxes. When you look at them as a whole, it's readily apparent that the overall Federal income tax system is regressive.
You're reading that chart incorrectly, it was like 5% in the 40s and 50s not 80%. I meant historically tiny, and should have been clear, though it is larger now. Yes, payroll tax is regressive, but only 6.2% and the cap rises every year.
> it's readily apparent that the overall Federal income tax system is regressive
It clearly is not, as 57% Americans paid no income tax last year (up from ~47%), and 19% (up from 17%) paid neither income tax nor payroll tax. So somewhere in the neighborhood of 38% of Americans paid payroll tax but not income tax meaning their federal tax burden was quite low. If you roll in the payroll tax the effective federal rates are still quite progressive[1]. Even Piketty and Saez note that the tax system when everything is accounted for is still progressive in the US[2] and they're accounting for wealth accumulation and not just income. If you want to include things like Piketty and Saez, you should probably include transfers, entitlements, and welfare, which makes the system look even more progressive in total. There's a good wikipedia article on the topic [3].
I'm not sure how you can argue against the conclusions of the CBO, Saez and Piketty who are the most prominent socialist economists in the world right now, and the Brookings Institute. Basically everyone who studies the topic disagrees with you, including people who greatly disagree with one another.
