Combining a variety of survey and administrative data, this paper measures the progressivity of taxes and transfers at the U.S. federal level and separately for each state. The findings are as follows. (i) The federal tax and transfer system is progressive. (ii) State and local tax and transfer...

What shapes the optimal degree of progressivity of the tax and transfer system? On the one hand, a progressive tax system can counteract inequality in initial conditions and substitute for imperfect private insurance against idiosyncratic earnings risk. At the same time, progressivity reduces...