ABSTRACT
I n Chapter 1, we showed that family incomes before taxes have stagnated and grown much more unequal over the past decade. This chapter broadens our analy-sis by examining changes in the amount and distribution of taxes. Changes in federal, state, and local taxes in the 1980s have worsened the distribution of after-tax income by taxing the middle class and the poor more heavily and giving large tax cuts to the richest 1%. Federal tax changes since 1977 alone will amount to an average tax break of $45,565 in 1990 for the richest families. The causes of this shift include a less progressive personal income tax, higher payroll taxes, and lower corporate taxes. There has also been a steadily increasing reliance on state and local taxes, which tend to be regressive.
