Currently, we have a slightly progressive income tax. It should be more progressive than it is (and it used to be better) but the tax brackets of today are still far fairer than a “flat tax” would be.
One (simple) thing about taxes that the vast majority of Americans appear not to understand is that our tax rates are marginal. You only pay the higher rate on incomes over a certain level.
Robert Reich explains this pretty simply in his latest post:
People in higher brackets pay a higher rate only on the portion of their income that hits that bracket — not on their entire incomes.
The truth is the current tax code treats everyone the same. It’s organized around tax brackets. Everyone whose income reaches the same bracket is treated the same as everyone else whose income reaches that bracket (apart from various deductions, exemptions, and credits, of course).
For example, no one pays any income taxes on the first $20,000 or so of their income (the exact amount depends on whether the person is married and eligible for tax credits like the Earned Income Tax Credit of the Family Tax Credit.)
So when Barack Obama calls for ending the Bush tax cut on incomes over $250,000, he’s only talking about the portion of people’s incomes that exceed $250,000. He’s not proposing to tax their entire incomes at the higher rate that prevailed under Bill Clinton.