Income Taxation of U.S. Households: Basic Facts

We use micro data from the U.S. Internal Revenue Service to document how households’ taxliabilities vary with income, marital status and the number of dependents. We report facts onthe distributions of average and marginal taxes, properties of the joint distributions of taxespaid and income, and discuss how taxes are affected by marital status and the number ofchildren. The data reveals a large dispersion in tax rates and taxes paid. Ranking householdsaccording to the average tax rates they face, those at top 1% face taxes in excess of 27.5%,while the median tax rate is about 8%. About 14.5% of married and 31.8% of unmarriedhouseholds do not pay any taxes. Given the progressivity in the system, tax liabilities aremore unequally distributed than income. The top 5% (1%) of households account for 54%(34.8%) of total tax liabilities, while top 5% (1%) of households have 34.8% (20.3%) of totalincome. We also provide parametric estimates of tax functions for use in applied work inmacroeconomics and public finance....