Effective Tax Rates by Income and Wealth Class

Jesse Bricker, Kevin B. Moore, Sarah J. Reber and Alice Henriques Volz

National Tax Journal, 2020, vol. 73, issue 4, 987-1004

Abstract: We use the Survey of Consumer Finances (SCF) from 1995 through 2016 to study trends in average effective tax rates across the income and wealth distribution. These average tax rates (ATRs) calculated from SCF income data are comparable to those calculated from external sources. We show that the wealthiest families have the highest ATRs, even as the income definition expands to include nontaxable sources and even though the wealthiest families are only sometimes among those with the highest annual income. However, the majority of income-producing assets held by the wealthiest are in the form of unrealized capital gains, effectively avoiding taxation. After altering the income concept to a measure of “potential income,” which incorporates changes in net worth and allows us to include untaxed increases in asset values, the wealthiest families no longer have the highest ATRs.

Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.17310/ntj.2020.4.03 (text/html)
Access is restricted to subscribers and members of the National Tax Association.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:73:y:2020:i:4:p:987-1004

Access Statistics for this article

National Tax Journal is currently edited by Stacy Dickert-Conlin and William M. Gentry

More articles in National Tax Journal from National Tax Association, National Tax Journal Contact information at EDIRC.
Bibliographic data for series maintained by The University of Chicago Press ().