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Income Taxation of U.S. Households: Basic Facts

Nezih Guner (), Remzi Kaygusuz () and Gustavo Ventura

No 5549, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We use micro data from the U.S. Internal Revenue Service to document how households' tax liabilities vary with income, marital status and the number of dependents. We report facts on the distributions of average and marginal taxes, properties of the joint distributions of taxes paid and income, and discuss how taxes are affected by marital status and the number of children. The data reveals a large dispersion in tax rates and taxes paid. Ranking households according 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 unmarried households do not pay any taxes. Given the progressivity in the system, tax liabilities are more 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 total income. We also provide parametric estimates of tax functions for use in applied work in macroeconomics and public finance.

Keywords: households; tax progressivity; taxation (search for similar items in EconPapers)
JEL-codes: E62 H31 J12 J22 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-03
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Published in Review of Economic Dynamics, 2014, 17(4), 559–581

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