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THE CHANGING DISTRIBUTION OF FEDERAL
TAXES: A CLOSER LOOK AT 1980
 
 
July 1988
 
 

This Staff Working Paper responds to a request from Representative Lynn Martin. It was prepared by Richard Kasten and Frank Sammartino of the Tax Analysis Division, under the general supervision of Rosemary Marcuss and Eric Toder. Questions regarding this paper may be addressed to Richard Kasten or Frank Sammartino.

 
 
CONTENTS
 

Summary and Introduction

Measuring Family Incomes and Federal Tax Liabilities

The Year 1980

Distribution of Family Income in 1977, 1980, 1984, and 1988

Effective Tax Rates in 1977, 1980, 1984, and 1988

Comparison of Effective Tax Rates in 1980 and 1988

Summary Indexes of Tax Progressivity

Appendix
 
TABLES
 
1.  Selected Economic Indicators, 1970-1990
2.  Distribution of Total Family Income by Population Decile
3.  Average Income Level in Each Population Decile, by Year and Treatment of Corporate Tax (In nominal dollars)
4.  Average Income Level in Each Population Decile, by Year and Treatment of Corporate Tax (In 1987 dollars)
5.  Effective Federal Tax Rates by Population Decile: Corporate Income Tax Allocated to Capital Income
6.  Effective Federal Tax Rates by Population Decile: Coporate Income Tax Allocated to Labor Income
7.  Effective Federal Tax Rates by Population Decile, with Constant 1988 Incomes: Corporate Income Tax Allocated to Capital Income
8.  Effective Federal Tax Rates by Population Decile, with Constant 1988 Incomes: Corporate Income Tax Allocated to Labor Income
9.  Gini Coefficients and Suits Indexes
10.  Gini Coefficients and Suits Indexes with Constant 1988 Incomes
A-1.  Minimum Income Level in Each Population Decile, by Year and Treatment of Corporate Tax (In nominal dollars)
A-2.  Minimum Income Level in Each Population Decile, by Year and Treatment of Corporate Tax (In 1987 dollars)
A-3.  Distribution of Family Income from Each Source of Income, by Population Decile, with Corporate Income Tax Allocated to Capital Income
A-4.  Distribution of Family Income from Each Source of Income, by Population Decile, with Corporate Income Tax Allocated to Labor Income
A-5.  Distribution of Family Income by Source of Income for Each Population Decile, with Corporate Income Tax Allocated to Capital Income
A-6.  Distribution of Family Income by Source of Income for Each Population Decile, with Corporate Income Tax Allocated to Labor Income
A-7.  Distribution of Family Income and of Federal Tax Payments by Population Decile, with Corporate Income Tax Allocated to Capital Income
A-8.  Distribution of Family Income and of Federal Tax Payments by Population Decile, with Corporate Income Tax Allocated to Labor Income
A-9.  Distribution of Total Federal Taxes Paid, by Type of Tax, for Each Population Decile, with Corporate Income Tax Allocated to Capital Income
A-10.  Distribution of Total Federal Taxes Paid, by Type of Tax, for Each Population Decile, with Corporate Income Tax Allocated to Labor Income
 
FIGURES
 
1.  Effective Federal Tax Rates by Population Decile: All Taxes Combined
2.  Effective Federal Tax Rates by Population Decile: Individual Income Tax and Social Insurance Taxes
3.  Effective Federal Tax Rates by Population Decile: Corporate Income Tax and Excise Taxes
4.  Effective Federal Tax Rates by Population Decile for 1980 and 1988, and for 1980 Tax Law Adjusted to 1988: All Taxes Combined
5.  Effective Federal Tax Rates by Population Decile for 1980 and 1988, and for 1980 Tax Law Adjusted to 1988: Individual Income Tax and Social Insurance Taxes
6.  Lorenz Curve
7.  Tax Concentration Curve
 
BOX
 
1.  Sources of Data on Family Income, and Adjustments to the Data


 

Summary and Introduction

A recently released study by the Congressional Budget Office measured changes in the distribution of combined federal tax liabilities by family income classes during the 1975-1990 period.1 That study presented a detailed analysis of the distribution of federal tax liabilities in three representative years: 1977, 1984, and 1988. In the study, combined federal taxes included individual and corporate income taxes, social insurance payroll taxes, and excise taxes except for the windfall profit tax. This staff working paper uses identical methods to study the same federal tax liabilities in one intervening year, 1980.

As reported in the earlier CBO study, total effective tax rates (the ratio of taxes from all four sources to family income) rose between 1977 and 1984 for the 10 percent of families at the lowest end of the distribution and fell for the 10 percent of families at the highest. Overall, the distribution of total federal taxes became less progressive.

This document is available in its entirety in PDF.

1. Congressional Budget Office, The Changing Distribution of Federal Taxes: 1975-1990 (October 1987).