Federal Income Tax Rates by Household Income

by Catherine on March 23, 2008

I updated a previous graph, comparing the effective tax rates for the Federal Individual Income and Social Insurance (payroll) by adding Excise and Corporate Income. Additionally, I added the tax rates for the Top 1%. Note: the effective tax rate increases for both individual and corporate income the higher the household’s income, while the social insurance and excise tax rate decreases.

{Click on the image to take a closer look}

Minimum household income:
Lowest Quintile $0
Second Quintile $17,900
Middle Quintile $30,500
Fourth Quintile $45,200
Highest Quintile $67,400
Top 1% $307,500

Data from Congressional Budget Office

[tags]Tax Rates, United States, Income tax, Social Security, Corporate Tax, Excise Tax[/tags]

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Tagged as: Bar Chart, CIA, Congressional Budget Office, Income - Types of, Tax Rates, United States

{ 4 comments… read them below or add one }

1 Thinker: Much better graph than before. Thank you.

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2 Too clueless: I’m sorry that I’m not taking the requisite minute to figure this out for myself, but are these effective rates across tax categories additive? I’m thinking the answer is no, given that they are averages of effective rates within a quintile, but I want to be sure.

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3 Larry Duncan: I do not understand the distrubution of the corporate income tax. Since these taxes are passed on to the consumers I would think that the lower quintiles who have too spend a larger portion of their income would have a higher percentage of it going to this tax.

It would be interesting to expand this graph to include state and lacal taxes.

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4 Charlie Quimby: The CBO (the source of this data) attributes corporate income taxes to the “owners of capital in proportion to their income from interest, dividends, capital gains, and rents.” Other calculations of tax incidence, such as done by the state of Minnesota, figure that consumers and employees pay a portion of the corporate income tax in the form of higher prices and/or lower wages, as the owners of capital will first try to reduce the impact of taxation in these ways before passing it on to shareholders.

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