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This study was prepared by the staffs of the Human Resources and Community Development Division and the Tax Analysis Division of the Congressional Budget Office, under the supervision of Nancy M. Gordon, Assistant Director for Human Resources and Community Development and 3ames M. Verdier, Assistant Director for Tax Analysis. Questions regarding the analysis may be addressed to Joseph Minarik, Roald Euller or Patricia Ruggles.
 
 

This memorandum discusses the impact on households in different income categories of the changes in personal income and excise taxes and in benefit payments for individuals enacted in fiscal year 1982. Most of these changes were included in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The analysis closely resembles that in a Congressional Budget Office (CBO) memorandum dated February 1982, which estimated the distributional impact of the tax and benefit reductions enacted in 1981. A more detailed presentation of general definitions and limitations, along with further discussion of the methodological problems associated with such estimates, may be found in that memorandum.

Like the earlier one, this memorandum concentrates on those changes in taxes and benefits that would directly affect household incomes. Thus, while proposed changes in the personal income tax, in excise taxes, and in benefit payments received directly by individuals are estimated for households in various income categories, changes in business taxes and in federal expenditures other than for direct benefits to households are not considered.¹ Although these changes will eventually affect household incomes, their immediate impact cannot be estimated based on the data available. In addition, no attempt has been made to take into account the possible macroeconomic effects of the tax and benefit changes.

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1. Some payments from programs categorized as "benefits for individuals" are made on behalf of individuals, for example, Medicare payments to hospitals for services received by beneficiaries. Reductions in payments to providers are not analyzed here since they have no direct impact on individuals.