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Effective Federal Tax Rates,
1997 to 2000
  August 2003  


Cover Graphic
© Royalty-free/Vol. 70/Corbis






                
Preface

This Congressional Budget Office (CBO) paper presents estimates of effective federal tax rates--tax burdens measured as a percentage of income--from 1979 through 2000, updating CBO's October 2001 report Effective Federal Tax Rates, 1979-1997. In addition to providing information for three more years, this analysis employs a revised methodology for combining data from the Bureau of the Census and the Internal Revenue Service that underlie the calculations and consequently revises some of CBO's previously published estimates. The analysis includes information on the four major federal taxes--individual income taxes; corporate income taxes; social insurance, or payroll, taxes; and excise taxes--separately and in combination. Along with providing the effective tax rate measures, the paper presents estimates of the number of households that pay more income taxes than payroll taxes.

Edward Harris, David Weiner, and Roberton Williams of CBO's Tax Analysis Division wrote the paper under the direction of G. Thomas Woodward. Robert Carroll, Robert Dennis, Arlene Holen, and Kurt Seibert reviewed drafts of the paper and provided valuable comments.

Leah Mazade edited the paper, and John Skeen proofread it. Denise Williams produced drafts of the manuscript. Lenny Skutnik printed the paper, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
August 2003




CONTENTS


Effective Federal Tax Rates, 1997 to 2000
      Major Findings of the Analysis
      Comparing Income and Payroll Tax Liabilities
      Changes in Methodology
      Measuring Tax Rates and Income
      Cautionary Notes
      Limitations of the Analysis
 
Appendix A
Methodology

Appendix B
Distributional Estimates by Income Category, 1979 to 2000

Appendix C
Households Whose Payroll Taxes Exceed Their Income Taxes, 1979 to 2000



Tables
   
1.  Shares of Federal Tax Liabilities for All Households, by Household Income Category, 1997 to 2000
2.  Percentage of Households Whose Payroll Taxes Exceed Their Income Taxes, by Household Income Quintile, 2000
B1-A.  Effective Federal Tax Rates for All Households, by Household Income Category, 1979 to 2000
B1-B.  Shares of Tax Liabilities for All Households, by Household Income Category, 1979 to 2000
B1-C.  Number of Households, Average Income and Income Shares, and Income Category Minimums for All Households, by Household Income Category, 1979 to 2000
B2-A.  Effective Federal Tax Rates for Households with Children, by Household Income Category, 1979 to 2000
B2-B.  Shares of Tax Liabilities for Households with Children, by Household Income Category, 1979 to 2000
B2-C.  Number of Households, Average Income and Income Shares, and Income Category Minimums for Households with Children by Household Income Category, 1979 to 2000
B3-A.  Effective Federal Tax Rates for Elderly Childless Households, by Household Income Category, 1979 to 2000
B3-B.  Shares of Tax Liabilities for Elderly Childless Households, by Household Income Category, 1979 to 2000
B3-C.  Number of Households, Average Income and Income Shares, and Income Category Minimums for Elderly Childless Households, by Household Income Category, 1979 to 2000
B4-A.  Effective Federal Tax Rates for Nonelderly Childless Households, by Household Income Category, 1979 to 2000
B3-B.  Shares of Tax Liabilities for Nonelderly Childless Households, by Household Income Category, 1979 to 2000
B3-C.  Number of Households, Average Income and Income Shares, and Income Category Minimums for Nonelderly Childless Households, by Household Income Category, 1979 to 2000
C-1.  Percentage of Households Whose Payroll Taxes Exceed Their Income Taxes, by Household Income Quintile, 1979 to 2000
   
Figures
   
1.  Effective Federal Tax Rates, 1997 to 2000
2.  Effective Federal Tax Rates, by Household Income Category, 1997 to 2000
3.  Effective Federal Tax Rates, by Revenue Source, 1997 to 2000
4.  Effective Federal Individual Income Tax Rates, by Household Income Category, 1997 to 2000
5.  Effective Federal Payroll Tax Rates, by Household Income Category, 1997 to 2000
6.  Effective Corporate Income Tax Rates, by Household Income Category, 1997 to 2000
7.  Effective Excise Tax Rates, by Household Income Category, 1997 to 2000
8.  Average Pretax Household Income, by Household Income Category, 1997 to 2000
9.  Average Pretax Income for High-Earning Households, by Selected Income Categories, 1997 to 2000
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