CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

A

CBO

PAPER

AUGUST 2003

Effective Federal

Tax Rates,

1997 to 2000

© Royalty-free/Vol. 70/Corbis

CBO

A

P A P E R

Effective Federal Tax Rates,

1997 to 2000

August 2003

The Congress of the United States O Congressional Budget Office

Preface

This Congressional Budget Office (CBO) paper presents estimates of effective federal tax

rates—tax burdens measured as a percentage of income—from 1979 through 2000, updating

CBO’s October 2001 report Effective Federal Tax Rates, 1979-1997. In addition to providing

information for three more years, this analysis employs a revised methodology for combining

data from the Bureau of the Census and the Internal Revenue Service that underlie the

calculations and consequently revises some of CBO’s previously published estimates. The analysis

includes information on the four major federal taxes—individual income taxes; corporate income

taxes; social insurance, or payroll, taxes; and excise taxes—separately and in combination. Along

with providing the effective tax rate measures, the paper presents estimates of the number of

households that pay more income taxes than payroll taxes.

Edward Harris, David Weiner, and Roberton Williams of CBO’s Tax Analysis Division wrote

the paper under the direction of G. Thomas Woodward. Robert Carroll, Robert Dennis, Arlene

Holen, and Kurt Seibert reviewed drafts of the paper and provided valuable comments.

Leah Mazade edited the paper, and John Skeen proofread it. Denise Williams produced drafts

of the manuscript. Lenny Skutnik printed the paper, and Annette Kalicki prepared the electronic

versions for CBO’s Web site (www.cbo.gov).

Douglas Holtz-Eakin

Director

August 2003

Contents

Effective Federal Tax Rates, 1997 to 2000

Major Findings of the Analysis 1

Comparing Income and Payroll Tax Liabilities 2

Changes in Methodology 3

Measuring Tax Rates and Income 3

Cautionary Notes 5

Limitations of the Analysis 5

Appendix A

Methodology 19

Appendix B

Distributional Estimates by Income Category,

1979 to 2000 21

Appendix C

Households Whose Payroll Taxes Exceed Their

Income Taxes, 1979 to 2000 71
vi

Tables

1. Shares of Federal Tax Liabilities for All Households,

by Household Income Category, 1997 to 2000 16

2. Percentage of Households Whose Payroll Taxes Exceed Their

Income Taxes, by Household Income Quintile, 2000 17

B1-A. Effective Federal Tax Rates for All Households,

by Household Income Category, 1979 to 2000 22

B1-B. Shares of Tax Liabilities for All Households,

by Household Income Category, 1979 to 2000 26

B1-C. Number of Households, Average Income and Income Shares,

and Income Category Minimums for All Households, by

Household Income Category, 1979 to 2000 30

B2-A. Effective Federal Tax Rates for Households with Children,

by Household Income Category, 1979 to 2000 34

B2-B. Shares of Tax Liabilities for Households with Children,

by Household Income Category, 1979 to 2000 38

B2-C. Number of Households, Average Income and Income Shares,

and Income Category Minimums for Households with Children,

by Household Income Category, 1979 to 2000 42

B3-A. Effective Federal Tax Rates for Elderly Childless Households,

by Household Income Category, 1979 to 2000 46

B3-B. Shares of Tax Liabilities for Elderly Childless Households,

by Household Income Category, 1979 to 2000 50

B3-C. Number of Households, Average Income and Income Shares,

and Income Category Minimums for Elderly Childless Households,

by Household Income Category, 1979 to 2000 54

B4-A. Effective Federal Tax Rates for Nonelderly Childless Households,

by Household Income Category, 1979 to 2000 58

B3-B. Shares of Tax Liabilities for Nonelderly Childless Households,

by Household Income Category, 1979 to 2000 62

B3-C. Number of Households, Average Income and Income Shares,

and Income Category Minimums for Nonelderly Childless

Households, by Household Income Category, 1979 to 2000 66

EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000
CONTENTS

vii

C-1. Percentage of Households Whose Payroll Taxes Exceed Their

Income Taxes, by Household Income Quintile, 1979 to 2000 72

Figures

1. Effective Federal Tax Rates, 1997 to 2000 7

2. Effective Federal Tax Rates, by Household Income

Category, 1997 to 2000 8

3. Effective Federal Tax Rates, by Revenue Source, 1997 to 2000 9

4. Effective Federal Individual Income Tax Rates,

by Household Income Category, 1997 to 2000 10

5. Effective Federal Payroll Tax Rates, by Household

Income Category, 1997 to 2000 11

6. Effective Corporate Income Tax Rates, by Household

Income Category, 1997 to 2000 12

7. Effective Excise Tax Rates, by Household Income

Category, 1997 to 2000 13

8. Average Pretax Household Income, by Household

Income Category, 1997 to 2000 14

9. Average Pretax Income for High-Earning Households,

by Selected Income Categories, 1997 to 2000 15

Effective Federal Tax Rates,

1997 to 2000

Taxes extract resources from the private sector to use

for public-sector activities. That process directly transfers

control over those resources from the taxpayers to the

government. But those who bear the ultimate liability for

a tax may differ substantially from those who initially

remit it. For example, households—either as owners,

employees, creditors, or customers—must ultimately

bear the cost of the taxes imposed on firms.1

 Moreover,

the imposition of taxes induces a wide variety of economic responses by households and businesses, which

may further shift the taxes’ burden. Households may

elect different retirement dates, alter the number of

individuals working and their hours, change decisions

about purchases, save more or less, rebalance their

portfolios, or engage in a myriad of other behaviors.

Firms may raise the prices of their products, alter their

wage and nonwage compensation (such as fringe benefits), or shift their investment plans, among other actions.

As a result of those responses and their interactions, taxes

also alter how much pretax income households reap from

their labor supply, the amount that they save, and the

prices they must pay for their purchases.

When a household’s income falls or the cost of its

purchases rises as a consequence of a tax, the household

effectively bears at least part of the liability for the tax

even if another household or firm actually remits the tax

payment. Effective tax rates measure the effective liability

for taxes as a percentage of household income. This paper

updates the Congressional Budget Office’s (CBO’s)

October 2001 study Effective Federal Tax Rates, 1979-

2000, extending that analysis through tax year 2000. In

addition, CBO’s new work incorporates a revised

methodology for combining data used in producing the

estimates from the Internal Revenue Service’s Statistics

of Income and the Current Population Survey, compiled

by the Bureau of the Census. As was the case with the

earlier study, this analysis focuses on effective tax rates

measured year by year; it does not examine how tax rates

change over time for individual taxpayers, does not assess

tax rates measured over periods longer than a year, and

focuses on effective average tax rates (taxes as a percentage of income) as opposed to effective marginal tax rates

(the tax paid on the last dollar of income).

Major Findings of the Analysis

In the late 1990s, households experienced only small

changes in effective tax rates. Between 1997 and 2000,

the overall effective federal tax rate dipped slightly in the

first year before climbing to a level in 2000 that was

0.2 percentage points above that in 1997 (see Figure 1).2

In each of the four years, the overall effective tax rate was

higher than in any year since 1979, peaking at 23.1

percent in 2000. That rising rate resulted at least partly

from the tax code’s progressive rate schedule and the

continued growth of pretax household income, the

average of which reached an all-time high of $74,100 in

2000—11 percent above its level in 1997 of $66,700

(expressed in 2000 dollars).

1. For the purposes of this analysis, households are defined as people

who share a single housing unit, regardless of the relationships

among them. 

2. By “overall,” this paper refers to the taxes collected from the four

largest sources of federal revenues: individual and corporate income

taxes, payroll taxes, and excise taxes. It does not include estate and

gift taxes, customs duties, or other miscellaneous collections.

CBO’s measure comprises about 95 percent of federal revenues.
2 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Those overall trends were not uniform across the income

distribution. The effective tax rate borne by households

in the lowest fifth, or quintile, of the distribution

climbed by 0.6 percentage points—from 5.8 percent in

1997 to 6.4 percent in 2000 (see Figure 2). In contrast,

the rate faced by households in the middle quintile fell

by 0.7 percentage points—from 17.4 percent to

16.7 percent. The top quintile’s effective tax rate was a

steady 28.0 percent in both 1997 and 2000. The biggest

reduction in rates was found among households in the

top 1 percent of the income distribution: the effective

rate for those households fell by 1.7 percentage points to

33.2 percent in 2000. That drop in rates resulted from

a reduction in the effective corporate income tax rate

faced by those households.

The increase in the overall effective tax rate stemmed

from a rise of 0.8 percentage points in the effective

individual income tax rate that was offset by smaller

declines in the effective rates on payroll and corporate

income taxes (see Figure 3). Two factors contributed to

the uptick in individual income tax rates. First, real

(inflation-adjusted) income growth pushed more households into higher tax brackets, a phenomenon known as

“real bracket creep.” Second, reported income at the

upper end of the income distribution grew disproportionately quickly, making a larger share of income subject

to the higher rates of the top tax brackets.3

 Effective

individual income tax rates rose (became less negative)

for households in the lowest income quintiles and rose

for those in the highest quintiles. They were nearly

constant for households in the fourth quintile and fell for

those in the second and middle quintiles (see Figure 4).4

Effective rates for other taxes showed little change

between 1997 and 2000, almost regardless of income

level. Social insurance, or payroll, tax rates were roughly

constant for all households except those in the highest

quintile, for which the cap on Social Security taxes limits

the growth of payroll tax liability (see Figure 5). The

effective corporate income tax rate fell slightly in every

year between 1997 and 2000; the largest percentagepoint decline occurred among the highest income

categories (see Figure 6). Finally, the effective federal

excise tax rate during that period shifted by no more than

0.1 percentage points for any income group and was

constant across all four years for households with the

highest income (see Figure 7).

Average real pretax reported income increased by 11 percent between 1997 and 2000 (see Figure 8). However, all

quintiles did not see the same percentage rise. For

households in the lowest quintile, average income grew

by 3 percent, compared with 17 percent for those in the

highest quintile. That unequal growth was observed as

well in the top percentiles of the income distribution:

average income for the top 10 percent of households

climbed 20 percent over the three years but jumped

34 percent for the 1 percent of households with the

highest income (see Figure 9).

Because of the rapid growth of reported income for that

1 percent of households—and despite the decline in their

effective tax rate—the share of taxes paid by the wealthiest households increased from 22.7 percent of all federal

revenues in 1997 to 25.6 percent in 2000 (see Table 1).

Other households in the top 10 percent of the income

distribution experienced a small increase in their tax

share. The larger share paid by the wealthiest households

was balanced by decreases in the shares paid by households in the middle three quintiles and the lower half of

the highest quintile. The share of taxes that households

in the lowest quintile accounted for did not change over

the period.

Comparing Income and Payroll

Tax Liabilities

Most households pay more payroll taxes than income

taxes; in 2000, nearly 71 percent of households did so

(see Table 2). (Table C-1 provides data for the full 1979-

2000 period.) That statistic counts both the employee

3. The income measure that CBO used in its analysis includes all cash

income reported on federal tax returns, including realized capital

gains and exercised stock options. To the extent that the latter

sources represent income that may have been earned over a period

longer than the single years in which it is reported, their inclusion

may have led CBO to overstate annual income and misclassify

households in the income distribution. At the same time, CBO’s

analysis also omits accrued but unrealized gains and may therefore

understate income in years in which gains are not realized.

4. Note that the effective individual income tax rate for households

in the lowest quintile was negative because of the refundability of

the earned income tax credit. For that quintile, the effective tax

rate became less negative from 1997 to 2000.
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 3

and employer shares of payroll taxes—because, as most

economists conclude, workers bear the full cost of such

taxes.5

 The percentage of households whose payroll taxes

exceed their income taxes has fallen somewhat below the

1994 peak of 73.6 percent but has been consistently

above 70 percent since 1998.

Low-income households are much more likely than their

wealthier counterparts to pay payroll taxes that exceed

their income taxes. In 2000, nearly 98 percent of

households in the lowest income quintile paid more

payroll than income taxes, compared with about

78 percent of households in the middle quintile and

26 percent in the top quintile. Those differences stem

partly from the low or negative income tax rates faced by

low-income households and partly from the cap on

Social Security levies, which limits the payroll taxes that

households in the highest income quintile pay.6

Changes in Methodology

The statistics reported in this paper differ from the

comparable numbers in CBO’s earlier study because of

changes in the methodology used to create the data set

for the analysis. (Appendix A discusses those changes in

more detail.) Although this paper focuses on changes in

effective tax rates between 1997 and 2000, it also reports

rates based on the new methodology for all years from

1979 through 2000 (see Appendix B). For consistency’s

sake, readers who wish to compare rates over time should

use only data from the appendix and not attempt to link

that information to the data reported in the 2001 study.

CBO anticipates that subsequent updates to its current

estimates will use the new methodology and may thus be

spliced onto the series in Appendix B.

The methodologically induced disparities between the

statistics reported here and in the 2001 study are of

several kinds. Among the most important are an increase

in the share of total income going to the lowest quintile

in virtually all years and a rise in the shares of total

federal taxes being borne by households in the lower

income quintiles. In addition, the new methodology

yields counts of households that are lower in most years

than the counts produced under CBO’s former procedures. Those lower totals stem from increases in the

number of households with children and of elderly

childless households that were more than offset by

reductions in the number of nonelderly childless households.

Measuring Tax Rates and Income

The primary focus of this update is effective tax rates.

Those rates may vary, depending on the measure of

income used to calculate them. CBO based this analysis

on adjusted pretax comprehensive household income.

That measure includes all cash income (both taxable and

tax-exempt), taxes paid by businesses (which are imputed

to individuals on the basis of assumptions about incidence), employee contributions to 401(k) retirement

plans, and the value of income received in kind from

various sources (including employer-paid health insurance premiums, Medicare and Medicaid benefits, and

food stamps, among others). There are various ways to

measure the value of benefits received in kind; CBO used

the Census Bureau’s fungible value measure to determine

the cash equivalent of in-kind government transfers. (In

the case of Medicare, for example, the cash value for

high-income households would equal the benefit’s

insurance value—that is, the average cost to the government of providing the benefit. For a low-income household, which would spend little on health care in the

absence of the program, the fungible value would be

much less than the insurance value.) Once a household’s

comprehensive income had been totaled, CBO then

adjusted it for differences in household size.

The comprehensive household income measure comprises income from more sources than people often

consider in assessing their well-being. The use of the

household (as opposed to the family or individual) as the

unit of analysis, the inclusion of benefits received in kind,

and the adjustment for household size further distance

the measure from popular conceptions. As a result, the

effective tax rates reported in this paper may appear to be

lower than an individual’s own estimates, and measured

income may seem to be higher. CBO’s earlier study

compared the comprehensive household income measure

5. If only the employee share of payroll taxes is included, just under

half of households pay more payroll taxes than income taxes. In

2000, about 45 percent of households did so.

6. In 2000, for example, Social Security taxes applied only to the first

$76,200 of earnings.
4 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

with alternative income gauges to assess how the choice

of measure affects calculated effective tax rates.7

The income measure used in an analysis of effective tax

rates also affects how households are ranked within the

income distribution. Counting income from more

sources moves households with income from those

sources up in the distribution relative to those not

receiving such income. Using households rather than

families as the unit of analysis generally lifts people in

multifamily households up in the distribution ahead of

some people in single-family households.8

 And adjusting

income to account for the greater needs of larger households drops those larger households down in the income

distribution and consequently pushes smaller ones up.

CBO’s analysis assumed that households bear the burden

of the taxes they pay directly (for example, individual

income and payroll taxes). Excise taxes were assumed to

be borne by households according to their consumption

of taxed goods (tobacco and alcohol) or—in the case of

excise taxes that affect intermediate goods—in proportion to overall consumption.9

 Taxes on businesses were

attributed to households. CBO assumed, as do most

economists, that the employer share of payroll taxes falls

on employees and therefore that the amount of those

taxes should be included in employees’ income and the

taxes counted as part of employees’ tax burden. Economists find less consensus on the ultimate incidence of

corporate income taxes. For this analysis, CBO considered the taxes to be borne by owners of capital under the

assumption that the taxes affect the way capital is

allocated between the corporate and noncorporate sectors

of the economy, which influences the rate of return on

all capital. CBO allocated corporate tax liabilities to

households in proportion to their income from interest,

dividends, rents, and capital gains.

Most of the results of CBO’s analysis are reported for

both the entire population and for parts of the income

distribution. Quintiles form the basic groups of interest.

However, many tables also include information about

households in the top 10 percent, top 5 percent, and top

1 percent of the income distribution. That breakdown

reveals the effects of the disproportionately rapid growth

of reported income—and hence of tax liabilities—

occurring over the past two decades at the distribution’s

top. The analysis does not show a comparable subdivision of the lowest quintile because effective tax rates and

income moved in similar ways for households in different parts of that income group.

Quintiles contain equal numbers of people. However,

because households vary in size, quintiles generally

contain unequal numbers of households. Some of the

statistics that CBO presents are broken down further by

the type of household: those with members under age 18

(households with children), those headed by a person age

65 or older and with no member under age 18 (elderly

childless households), and all others (nonelderly childless

households). The income and size of households vary

more widely across those three groups than across all

households—which means that the distributions of specific types of households among quintiles are more

unequal than the distribution of all households.

Cautionary Notes

Caution should be exercised in interpreting trends in tax

rates and income on the basis of the results of CBO’s

analysis, for a number of reasons. First, the analysis compares income groups over time, showing how effective

tax rates and income have changed for each quintile. But

the composition of quintiles changes from year to year.

Over time, people join and leave households, enter and

leave the labor force, and undergo other changes that can

alter their position in the income distribution. Trends in

tax rates and income that are discussed in this paper

reflect what has happened to people in the same parts of

the distribution over time, not what has happened to the

same people.

7. For a more detailed discussion of income measurement and tax

incidence issues, see Congressional Budget Office, Effective Federal

Tax Rates, 1979-1997 (October 2001), Chapter 3.

8. Some nonfamily members of households have no income and

therefore do not increase total household income. In such cases,

using households rather than families as the unit of analysis does

not affect the unit income for the family but does move the

nonfamily member without income up in the income distribution.

9. An example of an excise tax that affects intermediate goods is the

tax on diesel fuel, which increases transportation costs for many

other goods.
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 5

Second, expanding the income measure for calculating

effective tax rates to include taxes paid by businesses,

employee contributions to 401(k) plans, and in-kind

benefits may make that measure broader than what many

people think of when they consider their own income.

As a result, it may be difficult for readers to determine

their own placement within the reported distributions.

Third, adjusting income for the size of households in

order to rank them largely reorders those units within the

income distribution. Consequently, total household income can vary markedly among households of different

sizes, even though they are close to each other in the

distribution. Statistics based on household cash income

that is not adjusted for household size and that omits

in-kind income may provide information that is more

consistent with how most people think about their own

tax and income situations. Such information is absent

from this analysis but was examined in CBO’s earlier

study.10

A fourth issue involves drawing conclusions on the basis

of overall statistics that mask or even misrepresent information about subgroups or specific taxes. For example,

the total effective federal tax rate can rise between any

two years, even if effective rates for households in every

income quintile fall. If income grows more rapidly for

higher-income households facing higher tax rates than it

does for other households, the total effective rate rises,

even if tax rates do not change for income subgroups.

A fifth point is that different views of the data, although

consistent, may seem to yield contradictory conclusions.

An increase in the share of federal taxes paid by a given

quintile, for example, need not mean that the quintile’s

effective tax rate rose or that the distribution of after-tax

income changed in either direction. Different rates of

growth of income among quintiles can drive results in

directions that are not apparent in particular statistics,

such as the shares of taxes paid.

Finally, any choice of a period over which to assess

changes in effective tax rates or income is arbitrary. This

paper mainly reports the changes that occurred over the

1997-2000 period, the first year of which was the last

year examined in CBO’s 2001 analysis. Changes over

other periods may show markedly different patterns. For

example, between 1997 and 2000, the effective federal

tax rate for households in the lowest quintile rose by

0.6 percentage points; in contrast, between 1993 and

2000, that measure fell by 1.6 percentage points. The

most appropriate period for analysis depends on the

question being posed. (The tables in Appendix B provide

estimates of tax rates and income for every year of the

1979-2000 period and thus allow the reader to evaluate

changes between any pair of years.)

Limitations of the Analysis

This paper focuses on the effective rates of the taxes that

constituted the four largest sources of federal revenues

between 1997 and 2000. Considering only those revenue

sources (individual and corporate income taxes, payroll

taxes, and excise taxes) omits the 5 percent of revenues

that derive from estate and gift taxes, customs duties, and

other miscellaneous sources. Furthermore, an integral

component in examining effective tax rates is the

changing distribution of income among households over

the three-year period. To provide a context for those

changes, CBO’s analysis includes data showing how the

shares of income and tax liabilities for segments of the

income distribution have changed during the past two

decades.

The study’s focus on effective tax rates means that it is

not a comprehensive analysis of the federal tax system.

In particular, it does not examine how various taxes affect

people’s behavior and therefore does not report the tax

rates that people face on their last dollar subject to tax

(the marginal rates). Nor does the study look at the

benefits households receive—in the form of goods,

services, and transfer payments—that are funded by the

taxes they pay. For example, the analysis considers the

burden of the Social Security payroll tax but does not

take into account the benefits that workers who are

currently paying the tax will receive during retirement.

And although the measures of income that the study uses

include government transfers, both in cash and in kind,

those benefits are not balanced against tax liabilities. The

data thus do not directly reveal any ties between the taxes 10. See Congressional Budget Office, Effective Federal Tax Rates, 1979-

1997.
6 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

people pay and the benefits they receive, even if a direct

connection exists. 

Finally, the study looks only at annual income and taxes.

A better indication of the burden of taxes on households

at different positions in the income distribution would

cover a longer period—ideally, each person’s lifetime.

That kind of time frame would remove the effects of

year-to-year variations and avoid the problem that

information about a single year might differ markedly

from average values for longer periods.
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 7

Figure 1.

Effective Federal Tax Rates, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital

income. Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

1997 1998 1999 2000

0

10

20

30
8 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Figure 2.

Effective Federal Tax Rates, by Household Income Category, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital

income. Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

 Top

 10

Percent

 Top

 5

Percent

 Top

 1

Percent

0

10

20

30

40

1997 1998 1999 2000
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 9

Figure 3.

Effective Federal Tax Rates, by Revenue Source, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital

income. Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

Individual

 Income

 Tax

 Social

Insurance

 Taxes

Corporate

 Income

 Tax

Excise

 Taxes

0

2

4

6

8

10

12

14

1997 1998 1999 2000
10 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Figure 4.

Effective Federal Individual Income Tax Rates,

by Household Income Category, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

 Top

 10

Percent

 Top

 5

Percent

 Top

 1

Percent

-10

-5

0

5

10

15

20

25

1997 1998 1999 2000
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 11

Figure 5.

Effective Federal Payroll Tax Rates, by Household

Income Category, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Social insurance, or payroll, taxes are distributed to households paying those taxes directly or paying them indirectly through their employers.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

 Top

 10

Percent

 Top

 5

Percent

 Top

 1

Percent

0

2

4

6

8

10

12

1997 1998 1999 2000
12 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Figure 6.

Effective Corporate Income Tax Rates, by Household

Income Category, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Corporate income taxes are distributed to households according to their share of capital income.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

 Top

 10

Percent

 Top

 5

Percent

 Top

 1

Percent

0

2

4

6

8

10

1997 1998 1999 2000
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 13

Figure 7.

Effective Excise Tax Rates, by Household Income Category, 1997 to 2000

(Percent)

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

 Top

 10

Percent

 Top

 5

Percent

 Top

 1

Percent

0

1

2

3

1997 1998 1999 2000
14 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Figure 8.

Average Pretax Household Income, by Household

Income Category, 1997 to 2000

(Thousands of 2000 dollars)

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Lowest

Quintile

Second

Quintile

Middle

Quintile

Fourth

Quintile

Highest

Quintile

 All

Quintiles

0

50

100

150

200

1997 1998 1999 2000
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 15

Figure 9.

Average Pretax Income for High-Earning Households,

by Selected Income Categories, 1997 to 2000

(Thousands of 2000 dollars)

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Highest Quintile Top 10 Percent Top 5 Percent Top 1 Percent

0

200

400

600

800

1,000

1,200

1,400

1997 1998 1999 2000
16 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table 1.

Shares of Federal Tax Liabilities for All Households,

by Household Income Category, 1997 to 2000

Income Category 1997 1998 1999 2000

Lowest Quintile 1.1 1.1 1.1 1.1

Second Quintile 5.4 5.2 5.2 4.8

Middle Quintile 10.8 10.5 10.2 9.8

Fourth Quintile 18.3 18.2 17.8 17.4

Highest Quintile 64.2 64.9 65.6 66.7

All Quintiles 100.0 100.0 100.0 100.0

Top 10 Percent 49.3 49.9 51.0 52.2

Top 5 Percent 38.3 38.9 40.2 41.4

Top 1 Percent 22.7 23.3 24.3 25.6

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital

income. Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000 17

Table 2.

Percentage of Households Whose Payroll Taxes Exceed

Their Income Taxes, by Household Income Quintile, 2000

Individuals and Families Who Pay

Income or Payroll Tax

Individuals and Families Who Pay

Some Payroll Tax

Income Category

Employee and

Employer Share

Employee Share

Only

Employee and

Employer Share

Employee Share

Only

Lowest Quintile 97.7 96.1 99.3 97.6

Second Quintile 91.8 74.2 96.8 78.2

Middle Quintile 78.3 41.4 90.9 48.0

Fourth Quintile 73.5 17.0 80.8 18.7

Highest Quintile 26.3 2.8 29.3 3.1

All Quintiles 70.6 41.3 77.2 45.2

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers.

A

Methodology

The Congressional Budget Office’s (CBO’s) analysis

of effective tax rates draws information on income, taxes,

and consumption from multiple sources. The Statistics

of Income (SOI), produced by the Internal Revenue

Service, reports much of the information that taxpayers

provide on their individual income tax returns. The March

supplement to the Bureau of the Census’s Current Population Survey (CPS) contains survey data on both the

demographic characteristics and income of a large sample

of households. The Consumer Expenditure Survey (CEX),

created by the Bureau of Labor Statistics, provides information about the consumption patterns of surveyed

households. CBO combines the information it gathers

from all three sources into a single file of consistent data

on income, taxes, and consumption.

Recently, CBO changed the procedure that it uses to

combine data from the three sources. Prior analyses of

effective tax rates used the CPS as the base data source,

adjusting its income data to reflect the levels and distributions in the SOI and imputing certain types of income

and deductions from the SOI. In contrast, the new

methodology introduced in this analysis relies more

directly on the SOI’s information by statistically matching

each SOI record to a corresponding CPS record on the

basis of demographic characteristics and income. 

The matching process begins by dividing all records in

both the CPS and the SOI into demographic subgroups

on the basis of family composition, including the marital

status of the head of the family and the number of

children. Because income measures in the SOI and CPS

are not directly comparable, CBO employs a regression

equation for each demographic subgroup, which is estimated using data from the SOI, to calculate a predicted

income for each record for each source of data. All CPS

and SOI records are ranked by predicted income within

demographic subgroups, and the two files are then

matched, starting at the top of the income distribution:

the SOI record with the highest predicted income is

matched with the CPS record with the highest predicted

income—after their sample weights are taken into account.1

 The SOI record with the next highest predicted

income is then matched with the corresponding CPS

record, and the process is repeated until all SOI records

in the demographic subgroup have been paired with CPS

records.

Each pairing results in a new record that takes on the

demographic characteristics of the CPS record and the

income reported in the SOI. Some types of income, such

as most transfer payments and in-kind benefits, appear

only on the CPS; values for those items are drawn directly

from that survey. Because not all households have to file

tax returns, some households do not appear on the SOI;

thus, the CPS reflects more households. After all SOI

records have been matched to CPS records, the remaining

survey records are recorded as nonfilers, and the income

values are taken directly from the CPS. Finally, CBO

assigns information about consumption to each record

on the combined file by using data from the CEX.

1. Because neither the SOI nor the CPS contains a representative

distribution of the relevant population, each record is assigned a

sample weight indicating its relative size in making up the entire

population represented by the database. The matching process takes

account of those weights by effectively considering each record to

be replicated by the number of times indicated by its weight.

APPENDIX
20 EFFECTIVE FEDERAL TAX RATES

The new methodology has two advantages over the old

approach. First, because it takes income data directly from

the SOI, it maintains the relationships shown on tax

returns between income from different sources as well as

the tax liabilities that such income generates. Second, the

new procedure is likely to provide estimates that are more

consistent over time because it uses actual income rather

than roughly adjusting income data from the CPS to

reflect distributions that appear in the SOI.

One recurring effect of the old methodology was that it

reduced income data used to calculate rates for the lowestincome households to less than the amounts shown in the

CPS. Because CBO’s new approach takes those data

directly from the CPS, its revised estimates of income and

taxes show greater growth of income for low-income

households during the 1990s than did the estimates

derived by using the old methodology. CBO’s new

procedures had only small effects on measured levels and

trends in incomes and tax rates for households in higherincome groups.
B

Distributional Estimates by

Income Category, 1979 to 2000

The tables in this appendix present effective tax rates

for all years from 1979 through 2000 using CBO’s revised

methodology. Tables B1-A through B1-C display rates for

all households, and Tables B2-A through B2-C cover

households with children. Effective rates for elderly

childless households are listed in Tables B3-A through

B3-C, and Tables B4-A through B4-C show rates for

nonelderly childless households. The income measure used

is comprehensive household income adjusted for household size. 

APPENDIX
22 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-A.

Effective Federal Tax Rates for All Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Total Effective Tax Rate

Lowest Quintile 8.0 7.7 8.3 8.2 9.1 10.2 9.8 9.6 8.7 8.5

Second Quintile 14.3 14.1 14.7 13.8 13.7 14.6 14.8 14.8 14.0 14.3

Middle Quintile 18.6 18.7 19.2 17.9 17.5 18.0 18.1 18.0 17.6 17.9

Fourth Quintile 21.2 21.5 22.1 20.6 20.1 20.4 20.4 20.5 20.2 20.6

Highest Quintile 27.5 27.3 26.9 24.4 23.9 24.3 24.0 23.8 25.8 25.6

All Quintiles 22.2 22.2 22.4 20.7 20.4 21.0 20.9 20.9 21.6 21.8

Top 10 Percent 29.6 29.0 28.2 25.3 24.8 25.2 24.7 24.3 27.2 26.7

Top 5 Percent 31.8 30.8 29.4 26.0 25.6 26.1 25.4 24.6 28.5 27.8

Top 1 Percent 37.0 34.6 31.8 27.7 27.7 28.2 27.0 25.5 31.2 29.7

Effective Individual Income Tax Rate

Lowest Quintile 0 0.2 0.5 0.4 0.4 0.7 0.5 0.4 -0.6 -1.1

Second Quintile 4.1 4.5 4.8 4.2 3.8 4.0 4.0 4.0 3.2 3.1

Middle Quintile 7.5 8.0 8.3 7.4 6.7 6.7 6.6 6.5 5.8 5.9

Fourth Quintile 10.1 10.7 11.1 10.0 9.1 8.9 8.8 8.8 8.1 8.3

Highest Quintile 15.7 16.5 16.7 15.3 14.2 14.1 14.0 14.2 14.9 14.9

All Quintiles 11.0 11.7 12.0 11.0 10.2 10.2 10.2 10.4 10.3 10.4

Top 10 Percent 17.4 18.2 18.2 16.9 15.6 15.6 15.4 15.5 16.8 16.6

Top 5 Percent 19.0 19.7 19.6 18.3 16.9 17.0 16.7 16.6 18.5 18.2

Top 1 Percent 21.8 22.3 21.5 20.4 19.4 19.3 18.9 18.3 21.5 20.7

Effective Social Insurance Tax Rate

Lowest Quintile 5.3 5.3 5.9 5.9 6.1 6.5 6.6 6.7 6.4 6.9

Second Quintile 7.7 7.6 8.1 8.0 7.9 8.4 8.8 8.8 8.6 9.0

Middle Quintile 8.6 8.5 9.1 8.9 8.9 9.2 9.5 9.5 9.4 9.7

Fourth Quintile 8.5 8.5 9.1 9.1 9.1 9.3 9.6 9.7 9.8 10.2

Highest Quintile 5.4 5.5 6.1 6.3 6.3 6.4 6.5 6.1 6.7 6.6

All Quintiles 6.9 6.9 7.5 7.5 7.5 7.8 7.9 7.7 8.0 8.1

Top 10 Percent 4.2 4.3 4.8 5.1 5.1 5.1 5.1 4.6 5.3 5.1

Top 5 Percent 2.8 3.0 3.4 3.7 3.7 3.7 3.7 3.2 3.8 3.6

Top 1 Percent 0.9 1.0 1.3 1.6 1.5 1.4 1.3 1.0 1.5 1.3
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 23

Table B1-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Total Effective Tax Rate

7.9 8.9 8.4 8.2 8.0 6.6 6.3 5.6 5.8 5.8 6.1 6.4

13.9 14.6 14.2 13.7 13.5 13.1 13.4 13.2 13.6 13.0 13.3 13.0

17.9 17.9 17.6 17.4 17.3 17.3 17.3 17.3 17.4 16.8 16.9 16.7

20.5 20.6 20.5 20.2 20.2 20.4 20.5 20.3 20.5 20.4 20.5 20.5

25.2 25.1 25.3 25.6 26.8 27.4 27.8 28.0 28.0 27.6 28.0 28.0

21.5 21.5 21.5 21.5 22.0 22.3 22.6 22.7 22.9 22.6 22.9 23.1

26.3 26.1 26.6 26.9 28.6 29.4 29.8 30.1 29.9 29.3 29.7 29.7

27.2 27.0 27.6 28.1 30.5 31.3 31.8 32.0 31.6 30.8 31.2 31.1

28.9 28.8 29.9 30.6 34.5 35.8 36.1 36.0 34.9 33.4 33.5 33.2

Effective Individual Income Tax Rate

-1.6 -1.0 -1.6 -2.1 -2.3 -3.9 -4.4 -5.1 -5.2 -5.4 -5.2 -4.6

2.9 3.4 2.9 2.5 2.3 1.9 2.0 1.8 2.1 1.5 1.7 1.5

6.0 6.0 5.8 5.5 5.4 5.3 5.3 5.4 5.6 5.0 5.0 5.0

8.3 8.3 8.1 7.9 7.8 7.8 7.8 7.9 8.0 7.9 8.0 8.1

14.6 14.4 14.3 14.5 14.9 15.0 15.5 16.1 16.4 16.5 17.1 17.5

10.2 10.1 9.9 9.9 10.0 10.0 10.2 10.7 11.0 11.0 11.4 11.8

16.3 16.0 16.0 16.3 17.0 17.1 17.7 18.3 18.5 18.7 19.3 19.7

17.7 17.5 17.6 18.0 19.1 19.2 19.8 20.5 20.6 20.6 21.3 21.6

19.9 19.9 20.6 21.2 23.2 23.0 23.7 24.2 23.8 23.4 24.0 24.2

Effective Social Insurance Tax Rate

7.1 7.3 7.2 7.3 7.2 7.2 7.6 7.8 8.1 8.4 8.4 8.2

8.9 9.3 9.2 8.9 8.8 8.9 9.1 9.2 9.4 9.4 9.5 9.4

9.8 9.9 9.6 9.7 9.6 9.5 9.6 9.6 9.6 9.6 9.6 9.6

10.0 10.3 10.3 10.2 10.2 10.2 10.3 10.2 10.3 10.4 10.4 10.4

6.6 6.9 7.4 7.2 7.3 7.5 7.2 6.9 6.6 6.5 6.4 6.3

8.1 8.4 8.6 8.4 8.5 8.6 8.5 8.3 8.2 8.1 8.0 7.9

5.1 5.4 6.1 5.8 6.0 6.3 6.0 5.6 5.4 5.2 5.1 5.0

3.7 4.0 4.7 4.4 4.7 4.9 4.6 4.3 4.0 3.9 3.8 3.8

1.4 1.5 2.2 1.9 2.1 2.6 2.3 2.2 2.0 1.9 1.9 1.9

(Continued)
24 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-A.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Effective Corporate Income Tax Rate

Lowest Quintile 1.1 0.9 0.7 0.5 0.6 0.8 0.6 0.6 0.7 0.7

Second Quintile 1.2 1.0 0.8 0.5 0.7 0.7 0.7 0.7 0.9 0.8

Middle Quintile 1.4 1.2 1.0 0.7 0.9 1.0 0.9 0.9 1.2 1.2

Fourth Quintile 1.6 1.4 1.2 0.7 1.0 1.2 1.0 1.0 1.4 1.3

Highest Quintile 5.7 4.6 3.6 2.1 2.8 3.1 2.8 2.8 3.6 3.6

All Quintiles 3.4 2.8 2.2 1.4 1.8 2.0 1.8 1.9 2.4 2.4

Top 10 Percent 7.4 5.9 4.6 2.8 3.5 3.9 3.6 3.5 4.6 4.5

Top 5 Percent 9.5 7.4 5.9 3.5 4.4 4.9 4.5 4.3 5.7 5.5

Top 1 Percent 13.8 10.8 8.7 5.4 6.4 7.1 6.4 5.8 7.8 7.3

Effective Excise Tax Rate

Lowest Quintile 1.6 1.4 1.3 1.4 2.0 2.3 2.2 2.0 2.1 2.0

Second Quintile 1.3 1.1 1.0 1.1 1.3 1.4 1.4 1.3 1.4 1.4

Middle Quintile 1.1 0.9 0.9 0.9 1.1 1.1 1.1 1.1 1.1 1.1

Fourth Quintile 0.9 0.8 0.7 0.8 0.9 1.0 0.9 0.9 0.9 0.9

Highest Quintile 0.7 0.6 0.6 0.6 0.7 0.7 0.7 0.6 0.7 0.6

All Quintiles 1.0 0.8 0.8 0.8 0.9 1.0 0.9 0.9 0.9 0.9

Top 10 Percent 0.7 0.6 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.5

Top 5 Percent 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Top 1 Percent 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 25

Table B1-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Effective Corporate Income Tax Rate

0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.6 0.5 0.5 0.5 0.5

0.8 0.7 0.7 0.7 0.8 0.7 0.8 0.7 0.7 0.6 0.6 0.6

1.1 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.0 1.0 1.0

1.2 1.2 1.1 1.1 1.2 1.2 1.3 1.3 1.3 1.1 1.1 1.0

3.5 3.3 3.0 3.3 3.9 4.2 4.4 4.5 4.4 4.0 3.9 3.7

2.3 2.2 2.0 2.2 2.5 2.6 2.8 2.9 2.9 2.6 2.5 2.5

4.4 4.2 3.8 4.2 5.0 5.4 5.6 5.6 5.5 4.9 4.7 4.5

5.3 5.1 4.8 5.2 6.2 6.7 6.9 6.8 6.6 5.9 5.6 5.4

7.2 7.1 6.8 7.2 8.8 9.7 9.7 9.3 8.7 7.8 7.3 6.8

Effective Excise Tax Rate

1.8 2.0 2.2 2.3 2.5 2.6 2.4 2.3 2.3 2.2 2.4 2.2

1.2 1.3 1.4 1.5 1.6 1.7 1.6 1.5 1.5 1.4 1.6 1.4

1.0 1.0 1.2 1.2 1.2 1.3 1.3 1.2 1.1 1.1 1.2 1.2

0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.0 0.9 0.9 1.0 0.9

0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6

0.8 0.9 1.0 1.0 1.0 1.1 1.0 0.9 0.9 0.9 0.9 0.9

0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5

0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4

0.3 0.3 0.4 0.3 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service. 
26 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-B.

Shares of Tax Liabilities for All Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Total Federal Tax Liabilities

Lowest Quintile 2.1 2.0 2.0 2.1 2.2 2.4 2.3 2.1 1.8 1.7

Second Quintile 7.2 7.0 7.1 7.1 6.9 7.2 7.2 6.8 6.5 6.4

Middle Quintile 13.2 13.3 13.6 13.6 13.3 13.2 13.2 12.7 12.4 12.2

Fourth Quintile 21.0 21.3 21.9 22.1 21.8 21.4 21.3 20.8 20.7 20.4

Highest Quintile 56.4 56.3 55.2 55.0 55.7 55.6 55.8 57.5 58.4 59.1

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 40.7 40.0 38.6 38.0 39.0 39.3 39.5 41.6 42.2 43.2

Top 5 Percent 29.6 28.7 27.2 26.5 27.7 28.2 28.4 30.7 30.8 32.3

Top 1 Percent 15.4 14.2 12.9 12.8 14.0 14.7 14.8 17.1 16.2 18.1

Share of Individual Income Tax Liabilities

Lowest Quintile 0 0.1 0.2 0.2 0.2 0.3 0.2 0.2 -0.3 -0.4

Second Quintile 4.1 4.2 4.4 4.0 3.8 4.1 4.0 3.7 3.1 2.9

Middle Quintile 10.7 10.8 10.9 10.6 10.2 10.1 9.9 9.2 8.7 8.5

Fourth Quintile 20.2 20.2 20.6 20.2 19.7 19.2 19.0 18.0 17.5 17.2

Highest Quintile 64.9 64.8 63.9 64.9 66.1 66.3 66.9 68.9 70.9 71.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 48.1 47.6 46.6 47.6 49.1 49.9 50.5 53.4 54.7 56.3

Top 5 Percent 35.6 34.9 33.9 35.0 36.6 37.7 38.3 41.6 42.1 44.5

Top 1 Percent 18.3 17.4 16.3 17.7 19.6 20.7 21.2 24.6 23.5 26.6

Share of Social Insurance Tax Liabilities

Lowest Quintile 4.5 4.4 4.3 4.1 4.0 4.2 4.0 3.9 3.5 3.6

Second Quintile 12.5 12.1 11.9 11.3 10.9 11.2 11.2 11.0 10.6 10.8

Middle Quintile 19.8 19.5 19.2 18.7 18.3 18.3 18.3 18.1 18.0 17.8

Fourth Quintile 27.4 27.2 27.0 26.7 26.8 26.5 26.4 26.7 26.9 27.0

Highest Quintile 35.9 36.8 37.5 39.2 39.9 39.7 39.9 40.2 40.8 40.7

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 18.5 19.1 19.9 21.2 21.8 21.4 21.6 21.6 22.0 22.0

Top 5 Percent 8.5 9.1 9.6 10.5 11.0 10.8 10.8 10.7 11.1 11.2

Top 1 Percent 1.3 1.4 1.6 2.0 2.0 2.0 1.9 1.9 2.1 2.1
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 27

Table B1-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Total Federal Tax Liabilities

1.6 1.9 1.9 1.7 1.6 1.3 1.3 1.1 1.1 1.1 1.1 1.1

6.4 6.8 6.6 6.2 6.0 5.8 5.8 5.5 5.4 5.2 5.2 4.8

12.6 12.6 12.6 12.2 11.8 11.8 11.4 11.1 10.8 10.5 10.2 9.8

20.6 20.7 20.9 20.2 19.8 19.8 19.3 18.8 18.3 18.2 17.8 17.4

58.7 57.9 57.9 59.5 60.5 61.1 61.9 63.4 64.2 64.9 65.6 66.7

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

42.5 41.7 41.7 43.6 44.9 45.6 46.6 48.3 49.3 49.9 51.0 52.2

31.3 30.6 30.3 32.3 33.8 34.4 35.4 37.3 38.3 38.9 40.2 41.4

16.7 16.2 15.7 17.5 18.7 19.4 20.1 21.8 22.7 23.3 24.3 25.6

Share of Individual Income Tax Liabilities

-0.7 -0.4 -0.8 -0.9 -1.0 -1.7 -2.0 -2.1 -2.0 -2.1 -1.9 -1.6

2.8 3.3 2.9 2.5 2.3 1.8 1.9 1.6 1.7 1.3 1.3 1.1

8.9 8.9 9.0 8.4 8.1 8.1 7.7 7.3 7.2 6.4 6.1 5.7

17.6 17.8 18.0 17.1 16.8 16.9 16.2 15.5 14.9 14.6 14.0 13.5

71.4 70.4 70.8 73.0 73.8 74.9 76.1 77.6 78.2 79.8 80.6 81.2

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

55.3 54.3 54.5 57.2 58.4 59.3 60.8 62.9 63.7 65.4 66.7 67.7

42.9 42.1 42.1 44.9 46.4 46.9 48.5 50.9 51.8 53.4 55.1 56.2

24.3 23.8 23.4 26.2 27.6 27.8 29.0 31.4 32.3 33.5 35.0 36.5

Share of Social Insurance Tax Liabilities

3.8 4.0 4.0 3.8 3.8 3.7 4.1 4.1 4.2 4.4 4.4 4.2

10.8 11.1 10.6 10.3 10.2 10.1 10.4 10.4 10.5 10.4 10.5 10.2

18.2 17.8 17.2 17.3 17.0 16.9 16.9 16.9 16.8 16.6 16.5 16.3

26.6 26.5 26.2 26.1 26.0 25.8 25.9 25.8 25.7 25.8 25.7 25.8

40.4 40.5 41.9 42.3 42.8 43.3 42.6 42.7 42.6 42.5 42.8 43.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

22.0 22.2 24.0 24.0 24.6 25.3 24.8 24.8 24.8 24.5 25.0 25.6

11.2 11.5 12.9 12.9 13.5 14.1 13.6 13.8 13.7 13.6 14.1 14.6

2.2 2.2 2.8 2.7 2.9 3.7 3.5 3.6 3.7 3.7 4.0 4.3

(Continued)
28 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-B.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Corporate Income Tax Liabilities

Lowest Quintile 1.8 1.8 1.6 1.7 1.6 1.9 1.4 1.4 1.3 1.2

Second Quintile 4.1 3.9 3.8 4.0 3.8 3.8 3.7 3.3 3.8 3.4

Middle Quintile 6.7 7.0 7.1 7.5 7.5 7.5 7.5 7.2 7.7 7.5

Fourth Quintile 10.5 11.3 11.9 12.1 12.2 12.7 12.3 11.7 12.8 11.6

Highest Quintile 76.5 75.5 74.9 73.8 74.2 73.2 74.2 75.7 73.1 74.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 66.7 65.0 64.6 63.3 63.7 63.5 64.9 67.4 64.0 66.5

Top 5 Percent 57.9 55.6 55.4 54.9 55.2 55.1 56.9 59.5 55.3 58.4

Top 1 Percent 37.8 35.6 35.8 37.7 37.6 38.5 39.7 42.8 36.7 40.7

Share of Federal Excise Tax Liabilities

Lowest Quintile 9.9 9.7 9.6 9.7 10.8 11.6 11.2 10.2 10.1 9.7

Second Quintile 15.0 14.7 14.6 14.5 14.5 14.9 14.7 14.3 14.8 15.0

Middle Quintile 18.2 18.1 18.4 18.2 17.8 17.6 17.5 17.7 18.1 17.9

Fourth Quintile 21.6 21.6 21.7 22.2 22.1 22.0 21.6 21.2 21.8 22.0

Highest Quintile 34.8 35.2 34.9 34.8 34.2 33.3 34.3 36.0 34.7 35.1

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 21.4 21.7 21.3 20.8 20.4 20.0 21.2 23.1 21.5 21.7

Top 5 Percent 13.1 13.4 13.1 12.6 12.7 12.2 13.4 15.1 13.3 13.6

Top 1 Percent 4.6 4.6 4.6 4.4 4.6 4.5 5.0 6.4 5.0 5.4

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 29

Table B1-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Corporate Income Tax Liabilities

1.2 1.2 1.4 1.3 1.1 1.0 1.1 0.9 0.8 0.8 0.8 0.9

3.6 3.2 3.4 3.2 3.0 2.7 2.6 2.4 2.2 2.2 2.2 2.1

7.0 6.9 7.5 6.9 6.3 6.2 5.9 5.8 5.3 5.4 5.5 5.2

11.7 11.6 11.6 10.8 10.3 10.1 10.0 9.7 9.2 8.7 8.5 8.0

75.2 75.6 74.5 76.4 77.9 78.5 79.0 80.1 81.5 82.0 82.1 82.9

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

66.0 66.3 64.7 67.8 69.2 70.0 70.1 71.2 72.6 73.8 73.8 74.6

57.4 57.4 56.2 59.0 60.5 62.1 61.5 62.4 64.1 65.4 65.7 66.5

39.1 39.7 38.3 40.7 42.2 44.5 43.2 44.5 45.7 47.9 47.8 49.1

Share of Federal Excise Tax Liabilities

9.6 10.6 10.7 10.6 10.9 10.8 10.9 10.7 11.1 10.9 10.8 10.4

14.5 14.8 14.8 15.2 15.0 15.1 15.2 15.4 15.0 14.5 14.6 14.4

18.2 18.2 18.7 18.4 18.2 18.5 18.3 18.4 17.8 18.1 18.1 18.0

22.5 22.2 22.1 22.0 21.5 21.8 22.1 21.6 21.0 21.1 21.3 21.2

34.7 33.8 33.3 33.3 33.7 33.0 32.9 33.3 34.6 35.1 34.9 35.6

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

20.8 20.2 20.2 20.0 20.7 20.0 19.5 20.1 21.5 21.6 21.5 22.0

12.7 12.2 12.3 12.1 12.7 12.1 11.7 12.2 13.5 13.5 13.6 13.9

4.5 4.2 4.2 4.1 4.3 4.1 4.1 4.2 5.1 5.3 4.9 5.2

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
30 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-C.

Number of Households, Average Income and Income Shares, and

Income Category Minimums for All Households, by Household

Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Number of Households (Millions)

Lowest Quintile 17.9 18.1 17.9 17.6 17.5 18.5 18.5 18.8 18.2 18.5

Second Quintile 15.8 16.1 16.3 16.3 16.8 16.8 17.3 17.3 18.4 18.7

Middle Quintile 15.0 15.2 15.7 16.0 16.4 16.6 16.8 17.3 17.8 18.1

Fourth Quintile 15.4 15.7 15.9 16.2 16.6 16.8 17.3 17.5 18.0 18.4

Highest Quintile 16.7 17.1 17.5 17.8 18.0 18.0 18.5 18.5 18.7 19.0

All Quintiles 81.1 82.6 83.8 84.3 85.8 87.2 88.8 89.9 91.4 93.1

Top 10 Percent 8.6 8.8 9.0 9.1 9.2 9.1 9.4 9.5 9.5 9.7

Top 5 Percent 4.3 4.4 4.6 4.6 4.6 4.6 4.8 4.8 4.8 4.8

Top 1 Percent 0.9 0.9 0.9 0.9 0.9 0.9 1.0 1.0 1.0 1.0

Average Income (2000 dollars)

Pretax Income

Lowest Quintile 13,700 13,200 12,900 12,500 12,100 12,500 12,600 12,600 12,400 12,700

Second Quintile 29,800 28,600 28,400 27,700 26,700 28,300 28,400 29,100 28,000 28,600

Middle Quintile 44,700 43,300 42,700 41,900 41,200 43,000 43,800 44,800 44,500 45,200

Fourth Quintile 60,500 58,700 59,000 58,400 58,100 60,600 61,200 63,500 63,600 64,300

Highest Quintile 115,800 112,100 111,400 111,500 115,400 123,600 127,000 143,300 134,900 145,200

All Quintiles 52,300 50,700 50,600 50,400 50,800 53,100 54,500 58,500 56,500 59,000

Top 10 Percent 151,000 146,000 144,400 145,800 152,900 165,700 171,400 198,200 182,600 200,600

Top 5 Percent 205,500 195,700 192,500 197,100 207,800 228,000 237,500 285,900 253,400 287,800

Top 1 Percent 454,200 428,400 425,900 444,800 487,400 537,100 577,400 751,500 607,200 765,000

After-Tax Income

Lowest Quintile 12,600 12,200 11,900 11,500 11,000 11,200 11,400 11,400 11,300 11,600

Second Quintile 25,600 24,600 24,200 23,900 23,000 24,100 24,200 24,800 24,100 24,500

Middle Quintile 36,400 35,200 34,500 34,400 34,000 35,300 35,800 36,800 36,700 37,100

Fourth Quintile 47,700 46,100 46,000 46,400 46,400 48,200 48,700 50,500 50,800 51,000

Highest Quintile 84,000 81,500 81,500 84,300 87,900 93,600 96,500 109,200 100,100 108,000

All Quintiles 40,700 39,400 39,200 40,000 40,400 42,000 43,100 46,300 44,300 46,100

Top 10 Percent 106,300 103,600 103,600 109,000 115,000 123,900 129,000 150,100 132,900 147,100

Top 5 Percent 140,100 135,500 135,900 145,800 154,600 168,500 177,200 215,500 181,200 208,000

Top 1 Percent 286,300 280,300 290,400 321,800 352,200 385,500 421,500 559,900 417,800 537,900
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 31

Table B1-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of Households (Millions)

18.4 18.8 19.3 19.0 19.1 19.4 20.1 20.2 20.6 21.1 21.2 22.1

18.8 18.6 18.6 18.9 19.2 19.6 19.3 19.8 19.8 19.8 20.0 20.8

18.3 18.4 18.9 18.9 19.1 19.7 19.7 19.8 20.2 20.7 20.9 21.6

18.5 18.7 18.9 19.0 19.2 19.5 19.7 20.0 20.2 20.4 20.6 21.1

19.3 19.7 19.9 20.1 20.2 20.5 20.6 21.0 21.4 21.6 21.8 22.4

93.6 94.6 96.0 96.3 97.3 99.1 99.7 101.1 102.6 104.0 104.8 108.3

9.8 10.0 10.1 10.2 10.3 10.4 10.5 10.7 10.8 10.9 11.1 11.4

4.9 5.0 5.1 5.1 5.2 5.2 5.2 5.4 5.4 5.4 5.5 5.7

1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1

Average Income (2000 dollars)

Pretax Income

13,100 13,500 13,500 13,200 13,500 13,400 14,100 13,900 14,200 14,900 15,300 14,600

29,100 29,900 29,400 29,200 29,400 29,600 31,100 30,900 31,600 33,000 33,900 33,300

45,700 45,500 44,800 45,100 45,300 45,700 47,000 47,500 48,300 49,500 50,500 50,300

65,100 64,300 63,600 64,200 64,700 65,900 66,800 68,000 69,300 72,000 73,800 74,500

144,400 140,300 135,300 141,300 141,300 144,200 151,000 158,500 168,100 178,300 188,900 196,500

59,500 58,800 57,300 58,900 59,100 59,800 62,100 64,100 66,700 69,900 73,000 74,100

198,600 191,500 182,800 193,600 192,200 197,400 207,500 221,700 238,800 256,200 272,800 286,300

280,900 269,600 253,000 274,400 268,900 277,700 298,000 319,300 352,000 383,700 408,800 434,300

712,100 683,400 615,900 698,600 671,000 692,100 762,600 841,000 964,600 1,083,300 1,178,900 1,290,800

After-Tax Income

12,100 12,300 12,300 12,100 12,400 12,600 13,200 13,100 13,400 14,000 14,400 13,700

25,100 25,500 25,200 25,200 25,400 25,700 26,900 26,800 27,300 28,700 29,300 29,000

37,500 37,400 36,900 37,200 37,500 37,800 38,800 39,300 39,900 41,200 42,000 41,900

51,800 51,000 50,500 51,200 51,600 52,400 53,200 54,200 55,100 57,300 58,700 59,200

108,000 105,000 101,000 105,100 103,500 104,700 109,000 114,100 121,000 129,100 136,000 141,400

46,700 46,200 45,000 46,200 46,000 46,500 48,100 49,500 51,400 54,100 56,200 57,000

146,400 141,400 134,300 141,500 137,200 139,400 145,600 155,000 167,500 181,100 191,800 201,400

204,600 196,700 183,100 197,300 187,000 190,700 203,200 217,000 240,700 265,400 281,500 299,400

506,500 486,800 431,900 484,900 439,800 444,500 487,100 538,200 627,700 721,100 783,800 862,700

(Continued)
32 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B1-C.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Income (Percent)

Pretax Income

Lowest Quintile 5.8 5.7 5.5 5.2 4.9 5.0 4.8 4.5 4.4 4.3

Second Quintile 11.1 11.0 10.9 10.6 10.3 10.3 10.1 9.6 10.0 9.7

Middle Quintile 15.8 15.7 15.9 15.7 15.5 15.4 15.2 14.7 15.3 14.9

Fourth Quintile 22.0 22.1 22.2 22.2 22.2 22.0 21.9 21.2 22.1 21.6

Highest Quintile 45.5 45.8 46.0 46.7 47.7 48.0 48.6 50.6 48.9 50.3

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 30.5 30.6 30.7 31.1 32.2 32.6 33.4 35.8 33.5 35.3

Top 5 Percent 20.7 20.7 20.7 21.1 22.2 22.6 23.4 26.0 23.4 25.4

Top 1 Percent 9.3 9.1 9.1 9.6 10.3 10.9 11.5 14.0 11.2 13.3

After-Tax Income

Lowest Quintile 6.8 6.8 6.5 6.0 5.5 5.7 5.5 5.2 5.1 5.0

Second Quintile 12.3 12.1 12.0 11.5 11.2 11.1 10.9 10.3 10.9 10.7

Middle Quintile 16.5 16.5 16.5 16.3 16.1 16.0 15.8 15.3 16.1 15.6

Fourth Quintile 22.3 22.3 22.3 22.3 22.3 22.2 22.0 21.3 22.5 21.9

Highest Quintile 42.4 42.8 43.3 44.6 45.7 46.0 46.7 48.7 46.3 47.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 27.6 27.9 28.4 29.4 30.5 30.9 31.7 34.3 31.1 33.1

Top 5 Percent 18.1 18.4 18.9 19.7 20.7 21.2 22.0 24.8 21.3 23.5

Top 1 Percent 7.5 7.7 8.0 8.7 9.4 9.9 10.6 13.2 9.9 12.0

Minimum Adjusted Incomea

 (2000 dollars)

Lowest Quintile 0000000000

Second Quintile 14,400 13,800 13,600 13,200 12,700 13,500 13,500 13,700 13,200 13,600

Middle Quintile 22,800 22,000 21,900 21,400 21,200 22,100 22,500 23,100 23,000 23,500

Fourth Quintile 31,300 30,400 30,600 30,200 30,200 31,600 32,100 33,200 33,400 34,100

Highest Quintile 43,600 42,600 43,000 43,000 43,300 45,200 45,900 47,900 48,500 49,400

Top 10 Percent 55,700 55,100 55,100 55,500 56,200 59,200 60,300 63,000 63,900 65,500

Top 5 Percent 70,700 69,200 69,900 69,500 71,100 75,100 77,000 81,800 81,700 84,000

Top 1 Percent 138,300 134,200 132,400 133,000 138,900 148,500 154,400 179,300 168,200 181,000

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 33

Table B1-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Income (Percent)

Pretax Income

4.3 4.6 4.7 4.4 4.5 4.4 4.6 4.3 4.3 4.3 4.2 4.0

9.8 10.0 10.0 9.7 9.8 9.8 9.7 9.4 9.1 9.0 8.9 8.6

15.1 15.1 15.4 15.1 15.0 15.2 14.9 14.5 14.2 14.1 13.8 13.5

21.6 21.6 21.8 21.5 21.6 21.6 21.3 21.0 20.4 20.2 19.9 19.6

49.9 49.5 49.0 50.0 49.8 49.8 50.2 51.5 52.6 53.0 53.8 54.8

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

34.8 34.4 33.7 34.9 34.6 34.6 35.2 36.5 37.8 38.4 39.4 40.6

24.8 24.3 23.6 24.7 24.4 24.5 25.1 26.5 27.8 28.5 29.6 30.7

12.5 12.1 11.2 12.3 11.9 12.1 12.5 13.8 14.9 15.7 16.7 17.8

After-Tax Income

5.1 5.3 5.5 5.2 5.3 5.3 5.5 5.3 5.2 5.3 5.2 4.9

10.8 10.8 10.9 10.7 10.9 11.0 10.9 10.6 10.2 10.1 10.0 9.7

15.7 15.8 16.2 15.9 16.0 16.1 15.9 15.6 15.3 15.1 14.9 14.6

21.9 21.9 22.1 21.9 22.1 22.2 21.9 21.6 21.1 20.8 20.5 20.2

47.6 47.3 46.5 47.4 46.8 46.5 46.8 48.0 49.1 49.6 50.2 51.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

32.7 32.3 31.5 32.5 31.7 31.4 31.9 33.1 34.4 35.1 36.0 37.1

23.0 22.6 21.7 22.7 21.8 21.6 22.1 23.3 24.6 25.4 26.5 27.5

11.3 11.0 10.0 10.9 10.0 10.0 10.3 11.4 12.6 13.5 14.4 15.5

Minimum Adjusted Incomea

 (2000 dollars)

000000000000

13,900 14,200 14,200 13,800 14,000 14,200 14,900 14,600 15,000 15,700 16,100 15,800

23,900 23,900 23,500 23,600 23,700 24,000 24,800 25,100 25,400 26,400 26,900 26,800

34,400 34,200 33,900 34,200 34,100 34,900 35,500 36,000 36,600 37,900 38,700 38,900

50,100 49,400 48,700 49,300 49,700 50,500 51,800 52,800 54,000 56,100 57,800 58,400

66,500 65,300 64,300 65,500 65,900 66,800 69,200 71,100 73,200 76,400 78,600 80,100

86,100 84,700 83,200 85,900 85,600 87,500 91,000 93,700 98,300 102,500 105,700 108,400

183,600 175,100 171,700 181,600 178,700 184,100 195,800 206,700 219,400 234,000 249,700 257,100

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

a. The minimum adjusted income is the lower income boundary for each quintile.
34 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-A.

Effective Federal Tax Rates for Households with Children,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Total Effective Tax Rate

Lowest Quintile 9.1 8.9 9.8 9.6 10.2 11.8 11.1 10.9 8.8 8.5

Second Quintile 15.8 15.9 16.9 16.1 16.2 17.0 17.1 17.1 16.4 16.6

Middle Quintile 19.4 19.7 20.7 19.8 19.4 19.8 20.0 20.1 19.4 19.8

Fourth Quintile 21.3 21.9 22.9 21.8 21.2 21.5 21.6 21.7 21.1 21.5

Highest Quintile 25.9 26.0 25.9 23.7 23.6 23.5 23.2 23.3 25.4 24.9

All Quintiles 21.1 21.3 22.0 20.7 20.6 21.0 20.9 21.1 21.4 21.5

Top 10 Percent 28.0 27.6 26.9 24.2 24.3 24.3 23.7 23.7 26.8 26.0

Top 5 Percent 29.9 29.2 27.8 24.6 25.0 25.0 24.2 24.0 28.0 27.0

Top 1 Percent 34.4 31.9 29.7 25.6 27.0 27.0 25.6 24.9 30.7 28.7

Effective Individual Income Tax Rate

Lowest Quintile -0.5 -0.3 0.1 0.2 0.1 0.5 0.2 0.2 -1.2 -2.1

Second Quintile 4.8 5.2 5.7 5.0 4.6 4.8 4.7 4.7 3.8 3.6

Middle Quintile 8.2 8.7 9.2 8.4 7.6 7.5 7.4 7.4 6.5 6.6

Fourth Quintile 10.6 11.3 11.8 10.7 9.7 9.5 9.4 9.5 8.6 8.7

Highest Quintile 15.8 16.5 16.6 15.1 14.4 14.0 13.7 14.3 15.5 15.2

All Quintiles 10.4 11.0 11.4 10.3 9.8 9.7 9.5 10.0 9.8 9.7

Top 10 Percent 17.7 18.4 18.2 16.7 16.1 15.6 15.2 15.9 17.9 17.4

Top 5 Percent 19.2 19.9 19.4 17.9 17.4 17.0 16.4 17.0 19.8 19.2

Top 1 Percent 21.5 21.4 20.6 19.2 19.5 19.1 18.2 18.3 22.8 21.5

Effective Social Insurance Tax Rate

Lowest Quintile 7.3 7.2 7.9 7.7 7.6 8.5 8.4 8.4 7.8 8.4

Second Quintile 9.2 9.1 9.9 9.8 10.0 10.5 10.7 10.8 10.9 11.3

Middle Quintile 9.5 9.5 10.3 10.3 10.5 10.9 11.2 11.4 11.4 11.8

Fourth Quintile 8.9 9.1 9.9 10.1 10.2 10.6 10.9 11.0 11.1 11.5

Highest Quintile 5.3 5.5 6.2 6.6 6.5 6.7 6.9 6.2 6.8 6.7

All Quintiles 7.8 7.9 8.6 8.8 8.8 9.1 9.4 9.0 9.4 9.6

Top 10 Percent 3.8 4.0 4.5 4.9 4.8 4.9 5.2 4.3 5.0 4.9

Top 5 Percent 2.6 2.8 3.0 3.5 3.4 3.5 3.7 2.8 3.6 3.4

Top 1 Percent 1.0 1.1 1.4 1.7 1.5 1.5 1.5 1.0 1.7 1.4
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 35

Table B2-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Total Effective Tax Rate

7.8 9.1 8.3 7.7 7.5 5.5 4.7 3.8 3.9 3.9 4.3 5.1

16.0 16.8 16.1 15.4 15.2 14.5 14.7 14.4 14.9 13.9 14.1 13.8

19.8 19.9 19.8 19.5 19.2 19.3 19.2 19.1 19.4 18.4 18.6 18.2

21.5 21.7 21.7 21.4 21.4 21.5 21.5 21.5 21.7 21.1 21.1 21.1

24.8 24.7 25.3 25.4 27.1 27.5 28.1 28.3 28.3 28.1 28.6 28.8

21.3 21.3 21.4 21.2 21.9 21.9 22.2 22.1 22.4 22.1 22.5 22.9

25.8 25.5 26.5 26.7 29.2 29.6 30.3 30.4 30.4 30.0 30.5 30.6

26.7 26.4 27.6 27.8 31.0 31.7 32.3 32.5 32.2 31.5 32.0 32.0

28.2 28.2 29.7 30.3 35.0 36.1 36.7 36.4 35.5 34.1 34.2 33.8

Effective Individual Income Tax Rate

-3.0 -2.0 -3.1 -3.8 -4.1 -6.2 -7.6 -8.5 -8.8 -9.1 -8.9 -7.9

3.2 3.8 3.1 2.6 2.4 1.7 1.7 1.4 1.8 0.9 0.9 0.8

6.6 6.6 6.5 6.2 6.0 5.9 5.9 5.9 6.1 5.1 5.1 4.9

8.7 8.7 8.5 8.2 8.2 8.2 8.1 8.3 8.5 7.9 7.8 7.9

15.1 14.7 14.7 14.9 16.1 15.9 16.7 17.2 17.5 17.7 18.4 18.8

9.6 9.3 9.2 9.1 9.6 9.3 9.7 9.8 10.1 10.0 10.5 11.2

17.1 16.7 17.0 17.3 18.8 18.7 19.5 20.1 20.2 20.4 21.2 21.5

18.8 18.3 18.9 19.3 21.3 21.1 21.9 22.6 22.5 22.5 23.3 23.6

20.8 20.7 21.9 22.6 25.7 25.3 26.0 26.3 25.8 25.2 25.8 25.8

Effective Social Insurance Tax Rate

8.7 9.0 8.9 8.9 8.8 8.8 9.4 9.6 10.0 10.4 10.4 10.5

11.2 11.4 11.2 11.0 10.9 10.9 11.0 11.0 11.3 11.3 11.3 11.2

11.8 11.9 11.8 11.8 11.6 11.7 11.7 11.7 11.8 11.9 11.9 11.8

11.4 11.7 11.9 11.8 11.7 11.7 11.7 11.7 11.8 11.8 11.7 11.8

6.8 7.3 8.0 7.7 7.7 8.0 7.6 7.4 7.2 7.0 6.8 6.5

9.6 9.9 10.2 10.0 9.9 10.1 9.8 9.8 9.7 9.6 9.4 9.2

5.0 5.5 6.3 5.9 6.1 6.6 5.9 5.8 5.6 5.4 5.2 4.9

3.5 4.0 4.8 4.4 4.7 5.3 4.6 4.4 4.3 4.1 3.9 3.7

1.5 1.8 2.4 1.9 2.1 3.1 2.5 2.5 2.3 2.2 2.1 2.0

(Continued)
36 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-A.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Effective Corporate Income Tax Rate

Lowest Quintile 0.6 0.6 0.5 0.3 0.4 0.4 0.4 0.4 0.5 0.5

Second Quintile 0.6 0.5 0.4 0.3 0.4 0.3 0.3 0.3 0.5 0.4

Middle Quintile 0.7 0.6 0.4 0.3 0.3 0.4 0.4 0.4 0.5 0.5

Fourth Quintile 0.9 0.8 0.6 0.3 0.5 0.5 0.4 0.4 0.6 0.6

Highest Quintile 4.2 3.3 2.6 1.5 2.0 2.2 1.9 2.2 2.5 2.4

All Quintiles 1.9 1.6 1.3 0.7 1.0 1.1 1.0 1.1 1.3 1.3

Top 10 Percent 5.9 4.7 3.8 2.1 2.9 3.1 2.7 3.0 3.4 3.2

Top 5 Percent 7.6 6.0 4.9 2.8 3.7 4.0 3.5 3.8 4.2 4.0

Top 1 Percent 11.5 9.0 7.5 4.5 5.6 6.0 5.3 5.3 5.8 5.5

Effective Excise Tax Rate

Lowest Quintile 1.6 1.4 1.3 1.4 2.1 2.5 2.2 2.0 1.8 1.8

Second Quintile 1.2 1.0 1.0 1.0 1.3 1.4 1.3 1.3 1.3 1.3

Middle Quintile 1.0 0.9 0.8 0.9 1.0 1.1 1.0 1.0 1.0 1.0

Fourth Quintile 0.9 0.7 0.7 0.7 0.8 0.9 0.9 0.8 0.8 0.8

Highest Quintile 0.7 0.6 0.5 0.5 0.6 0.7 0.7 0.6 0.6 0.6

All Quintiles 0.9 0.8 0.7 0.8 0.9 1.0 1.0 0.9 0.9 0.9

Top 10 Percent 0.6 0.5 0.5 0.5 0.5 0.6 0.6 0.5 0.5 0.5

Top 5 Percent 0.5 0.5 0.4 0.4 0.5 0.5 0.6 0.4 0.5 0.4

Top 1 Percent 0.4 0.4 0.4 0.3 0.4 0.5 0.5 0.3 0.4 0.3

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships. A household with children has at least one member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 37

Table B2-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Effective Corporate Income Tax Rate

0.4 0.3 0.3 0.4 0.4 0.4 0.5 0.4 0.4 0.3 0.3 0.3

0.5 0.4 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.3 0.4 0.4

0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.4 0.4 0.4

0.6 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6

2.4 2.1 2.0 2.2 2.7 2.8 3.2 3.1 3.1 2.9 2.9 3.0

1.3 1.1 1.1 1.1 1.4 1.5 1.7 1.6 1.7 1.5 1.6 1.7

3.2 2.9 2.7 3.0 3.7 3.8 4.3 4.1 4.1 3.7 3.7 3.7

4.0 3.6 3.4 3.7 4.6 4.8 5.3 5.1 5.0 4.5 4.5 4.4

5.6 5.4 5.1 5.5 6.9 7.4 7.8 7.3 7.1 6.3 6.0 5.8

Effective Excise Tax Rate

1.7 1.8 2.1 2.2 2.4 2.5 2.4 2.3 2.4 2.2 2.4 2.2

1.2 1.2 1.4 1.5 1.5 1.6 1.5 1.5 1.4 1.4 1.5 1.4

0.9 0.9 1.1 1.1 1.1 1.2 1.2 1.1 1.0 1.1 1.1 1.1

0.8 0.8 0.9 0.9 0.9 1.0 1.0 0.9 0.8 0.8 0.9 0.9

0.5 0.6 0.6 0.6 0.6 0.7 0.6 0.5 0.5 0.5 0.6 0.5

0.8 0.9 1.0 1.0 1.0 1.1 1.0 0.9 0.9 0.9 0.9 0.8

0.4 0.5 0.6 0.5 0.5 0.6 0.5 0.5 0.5 0.4 0.4 0.4

0.4 0.4 0.5 0.4 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.3

0.3 0.3 0.4 0.3 0.3 0.4 0.3 0.2 0.3 0.3 0.2 0.2

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
38 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-B.

Shares of Tax Liabilities for Households with Children,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Total Federal Tax Liabilities

Lowest Quintile 2.7 2.7 2.8 3.0 3.2 3.4 3.3 3.0 2.5 2.3

Second Quintile 10.3 10.3 10.7 10.7 10.4 10.6 10.8 10.3 9.4 9.5

Middle Quintile 19.0 19.1 19.4 19.8 18.5 18.4 18.6 17.4 17.2 17.3

Fourth Quintile 25.9 26.1 26.9 27.5 25.9 25.6 25.7 24.5 24.2 24.4

Highest Quintile 42.0 41.6 40.0 38.9 41.8 41.8 41.4 44.7 46.5 46.1

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 27.4 26.8 24.9 23.8 26.8 27.2 26.6 30.3 31.7 31.4

Top 5 Percent 19.6 18.7 17.1 16.2 19.2 19.5 18.4 22.5 23.3 23.5

Top 1 Percent 9.4 9.0 8.6 7.5 10.3 10.5 9.2 13.2 12.8 13.1

Share of Individual Income Tax Liabilities

Lowest Quintile -0.3 -0.2 0.1 0.1 0.1 0.3 0.1 0.1 -0.8 -1.3

Second Quintile 6.3 6.6 6.9 6.7 6.2 6.5 6.5 6.0 4.7 4.5

Middle Quintile 16.3 16.4 16.7 16.7 15.2 15.1 15.1 13.5 12.6 12.7

Fourth Quintile 26.1 26.1 26.8 26.9 24.8 24.4 24.5 22.5 21.5 21.8

Highest Quintile 51.6 51.1 49.5 49.6 53.7 53.7 53.7 57.9 61.9 62.3

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 35.2 34.6 32.6 32.9 37.2 37.9 37.5 42.9 46.1 46.6

Top 5 Percent 25.6 24.7 23.2 23.6 28.0 28.7 27.4 33.7 36.0 37.1

Top 1 Percent 11.9 11.7 11.5 11.2 15.6 16.1 14.5 20.4 20.9 21.7

Share of Social Insurance Tax Liabilities

Lowest Quintile 6.0 5.9 5.8 5.6 5.6 5.6 5.5 5.4 5.0 5.2

Second Quintile 16.2 16.0 15.9 15.3 14.9 15.1 15.1 15.1 14.2 14.5

Middle Quintile 25.1 25.0 24.5 24.1 23.4 23.1 23.2 22.9 23.0 23.1

Fourth Quintile 29.3 29.2 29.5 29.7 29.1 28.9 28.7 28.9 29.1 29.2

Highest Quintile 23.3 23.9 24.2 25.2 26.9 27.2 27.3 27.5 28.6 27.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 9.9 10.5 10.5 11.3 12.4 12.7 12.9 12.7 13.6 13.1

Top 5 Percent 4.5 4.8 4.7 5.4 6.1 6.2 6.2 6.1 6.8 6.6

Top 1 Percent 0.7 0.9 1.0 1.2 1.4 1.3 1.2 1.2 1.6 1.4
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 39

Table B2-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Total Federal Tax Liabilities

2.2 2.7 2.5 2.2 2.1 1.5 1.3 1.0 1.0 1.0 1.1 1.2

9.2 10.4 9.9 9.3 8.7 8.3 8.3 8.1 8.1 7.5 7.3 6.6

17.4 17.6 17.2 16.8 15.7 15.9 14.9 15.0 14.6 13.7 13.0 12.0

24.4 24.7 24.5 24.1 23.2 23.5 21.9 22.1 21.8 21.0 20.1 19.3

46.5 44.3 45.8 47.5 50.1 50.6 53.4 53.6 54.3 56.7 58.4 60.8

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

32.1 29.6 30.5 32.1 35.6 36.0 38.6 39.8 40.7 42.9 44.7 47.2

23.7 21.7 22.1 23.8 27.2 27.1 30.1 31.1 31.9 34.2 35.9 38.4

13.1 10.8 11.4 12.4 15.5 15.1 17.6 18.5 18.8 20.5 22.2 24.8

Share of Individual Income Tax Liabilities

-1.9 -1.4 -2.1 -2.5 -2.6 -4.0 -4.7 -5.1 -5.2 -5.4 -4.8 -3.7

4.0 5.3 4.5 3.7 3.1 2.3 2.2 1.8 2.1 1.1 1.0 0.8

12.9 13.4 13.1 12.3 11.2 11.4 10.4 10.4 10.2 8.3 7.6 6.6

22.0 22.5 22.3 21.5 20.3 21.1 19.1 19.2 18.8 17.3 16.0 14.9

63.0 60.1 62.2 64.9 68.0 69.2 72.9 73.7 74.1 78.8 80.2 81.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

47.4 44.1 45.7 48.6 52.6 53.4 57.4 59.3 59.9 64.5 66.5 68.1

37.1 34.3 35.4 38.3 42.7 42.5 47.1 48.8 49.4 53.9 55.9 58.0

21.5 18.1 19.6 21.5 26.0 24.9 28.7 30.1 30.2 33.5 36.0 38.8

Share of Social Insurance Tax Liabilities

5.4 5.7 5.6 5.4 5.3 5.2 5.7 5.9 6.1 6.4 6.3 6.0

14.3 15.1 14.4 14.1 13.9 13.6 14.0 14.1 14.2 14.0 13.9 13.3

23.1 22.6 21.5 21.6 21.1 21.0 20.4 20.8 20.5 20.2 20.0 19.4

28.9 28.5 28.1 28.1 28.1 27.9 27.1 27.4 27.4 27.0 26.8 26.9

28.2 28.0 30.3 30.6 31.4 32.3 32.6 31.7 31.8 32.3 33.0 34.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

13.8 13.5 15.2 15.0 16.4 17.3 17.1 17.1 17.4 17.6 18.1 19.0

6.9 7.0 8.1 8.0 9.1 9.8 9.7 9.6 9.9 10.3 10.5 11.2

1.6 1.5 1.9 1.7 2.0 2.8 2.7 2.8 2.9 3.1 3.3 3.7

(Continued)
40 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-B.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Corporate Income Tax Liabilities

Lowest Quintile 2.1 2.3 2.4 2.9 2.4 2.3 2.3 1.8 2.0 2.1

Second Quintile 4.3 4.4 4.8 5.6 5.0 3.9 4.7 3.5 4.5 4.2

Middle Quintile 7.1 7.3 7.4 8.1 6.5 6.5 7.0 5.7 6.9 7.1

Fourth Quintile 12.2 12.6 12.1 12.1 11.2 11.0 11.1 8.6 11.1 10.7

Highest Quintile 73.6 72.1 71.9 69.3 73.0 74.1 73.1 79.3 73.1 72.7

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 62.9 61.4 61.6 59.5 63.8 65.6 63.9 72.2 64.2 64.4

Top 5 Percent 53.9 52.3 53.6 51.7 57.0 57.9 56.4 65.7 55.6 57.3

Top 1 Percent 34.0 34.5 37.7 36.6 42.5 43.3 40.9 51.8 38.8 41.7

Share of Federal Excise Tax Liabilities

Lowest Quintile 10.9 11.1 11.2 11.8 14.4 14.7 14.1 12.7 12.1 11.7

Second Quintile 17.8 17.9 18.0 18.0 17.7 18.0 17.9 17.8 17.2 17.8

Middle Quintile 22.5 22.4 22.3 22.7 20.8 20.2 20.0 20.4 21.1 21.1

Fourth Quintile 23.9 23.3 23.6 24.2 22.5 22.4 22.3 22.1 22.7 22.5

Highest Quintile 24.2 24.4 23.8 22.7 23.8 24.0 25.0 26.3 26.3 26.5

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 13.1 13.5 12.8 12.0 12.7 13.4 14.2 15.1 15.0 14.9

Top 5 Percent 7.9 8.1 7.6 7.0 7.8 8.4 8.9 9.5 9.0 9.2

Top 1 Percent 2.5 2.8 3.0 2.3 3.1 3.8 3.7 4.1 3.6 3.8

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. A household with children has at least one member under age

18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 41

Table B2-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Corporate Income Tax Liabilities

2.0 1.8 2.1 2.0 1.7 1.6 1.6 1.5 1.4 1.3 1.1 1.0

4.2 4.4 4.8 4.3 3.6 3.4 3.6 3.3 3.0 2.6 2.7 2.3

5.9 6.7 7.1 6.9 5.3 5.7 4.8 5.1 4.8 4.2 4.3 3.7

10.3 11.2 10.7 9.8 9.1 9.5 8.6 8.5 8.7 8.0 7.6 7.1

74.2 72.9 72.1 75.1 78.4 77.8 79.5 80.1 80.7 82.6 83.1 84.7

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

65.4 62.8 62.5 66.6 70.1 69.6 71.9 72.7 73.5 76.3 76.1 78.2

57.9 56.0 54.6 58.9 62.6 62.1 65.5 66.1 66.3 69.8 69.7 71.8

43.0 38.9 38.8 42.0 47.3 46.8 49.4 50.3 50.4 54.4 54.8 57.8

Share of Federal Excise Tax Liabilities

12.3 13.0 13.5 13.2 14.3 13.9 13.7 14.4 15.4 14.9 14.2 13.2

17.3 18.1 18.3 19.0 18.5 18.0 18.5 19.7 18.9 18.3 18.5 17.9

21.1 20.7 20.8 20.5 19.8 20.0 19.8 19.9 19.6 19.5 19.1 18.9

23.1 22.4 22.1 22.4 21.9 22.2 21.6 21.1 20.5 20.7 21.2 21.2

25.8 25.3 24.9 24.5 24.9 25.3 25.9 24.5 25.1 26.2 26.9 28.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

14.2 14.2 14.2 13.4 14.2 14.6 14.2 14.0 15.2 15.5 15.5 16.5

8.4 8.8 8.8 8.1 8.6 8.6 8.7 8.4 9.4 9.8 9.7 10.3

3.2 3.0 3.3 2.7 3.0 3.0 3.2 3.0 3.5 3.9 3.4 3.7

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
42 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-C.

Number of Households, Average Income and Income Shares, and

Income Category Minimums for Households with Children,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Number of Households (Millions)

Lowest Quintile 6.5 6.7 6.8 7.0 7.4 7.2 7.6 7.7 8.2 8.1

Second Quintile 7.1 7.2 7.2 7.2 7.2 7.2 7.4 7.5 7.2 7.3

Middle Quintile 7.4 7.4 7.3 7.2 7.1 7.2 7.2 7.1 7.2 7.3

Fourth Quintile 6.8 6.7 6.6 6.6 6.5 6.6 6.6 6.6 6.6 6.7

Highest Quintile 4.8 4.7 4.7 4.6 4.7 4.8 4.9 5.0 5.0 5.0

All Quintiles 32.6 33.0 32.8 32.8 33.0 33.2 33.9 34.2 34.3 34.6

Top 10 Percent 2.1 2.1 2.0 2.0 2.1 2.2 2.2 2.2 2.3 2.2

Top 5 Percent 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1

Top 1 Percent 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Average Income (2000 dollars)

Pretax Income

Lowest Quintile 19,100 18,000 17,400 16,600 16,000 16,500 16,500 16,400 15,500 15,800

Second Quintile 37,600 36,000 35,800 34,800 33,800 35,700 36,000 36,800 36,100 36,800

Middle Quintile 54,300 52,400 52,300 51,600 51,200 53,200 54,300 55,800 55,600 56,500

Fourth Quintile 73,100 71,300 71,900 71,300 71,200 74,300 75,200 77,900 78,400 79,800

Highest Quintile 138,900 135,500 135,300 134,500 142,000 151,000 150,700 176,900 165,900 175,400

All Quintiles 59,500 57,000 56,500 55,100 55,600 58,900 59,200 64,000 61,700 63,300

Top 10 Percent 190,000 185,400 187,300 185,800 202,100 214,600 211,100 264,300 237,000 257,500

Top 5 Percent 257,100 254,400 259,900 252,700 281,900 301,700 298,200 397,400 334,300 369,800

Top 1 Percent 543,200 515,900 534,600 540,900 628,400 696,600 680,700 1,084,700 758,700 927,400

After-Tax Income

Lowest Quintile 17,400 16,400 15,700 15,000 14,300 14,500 14,700 14,600 14,200 14,500

Second Quintile 31,600 30,300 29,700 29,200 28,300 29,600 29,800 30,500 30,200 30,700

Middle Quintile 43,700 42,100 41,500 41,400 41,200 42,600 43,400 44,600 44,900 45,300

Fourth Quintile 57,500 55,600 55,400 55,700 56,200 58,300 59,000 61,000 61,900 62,600

Highest Quintile 102,900 100,300 100,300 102,700 108,500 115,400 115,700 135,700 123,700 131,700

All Quintiles 47,000 44,800 44,100 43,700 44,200 46,600 46,900 50,500 48,500 49,800

Top 10 Percent 136,800 134,200 136,900 140,900 152,900 162,500 161,100 201,700 173,400 190,600

Top 5 Percent 180,300 180,100 187,600 190,400 211,300 226,400 226,200 301,900 240,600 270,000

Top 1 Percent 356,400 351,400 375,700 402,200 459,000 508,600 506,700 814,900 525,800 661,000
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 43

Table B2-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of Households (Millions)

8.0 8.0 8.0 8.1 8.2 8.4 8.3 8.6 8.5 8.6 8.5 8.6

7.4 7.7 7.9 8.1 8.3 8.3 8.4 8.6 8.6 8.5 8.5 8.6

7.3 7.3 7.3 7.5 7.6 7.7 7.5 7.7 7.7 7.6 7.5 7.7

6.7 6.7 6.7 6.8 7.1 7.1 7.0 7.1 7.2 7.1 7.2 7.4

5.0 5.0 5.2 5.3 5.6 5.6 5.8 5.5 5.6 5.7 5.8 6.2

34.6 34.9 35.3 35.9 36.9 37.2 37.1 37.6 37.8 37.6 37.6 38.5

2.3 2.3 2.3 2.4 2.5 2.6 2.7 2.6 2.7 2.7 2.8 2.9

1.1 1.2 1.2 1.2 1.3 1.3 1.4 1.3 1.4 1.4 1.4 1.5

0.3 0.2 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Average Income (2000 dollars)

Pretax Income

16,700 17,400 17,500 17,100 17,700 17,500 18,800 18,400 19,200 20,200 20,700 19,900

37,300 38,000 37,000 36,400 36,600 37,100 38,700 38,400 39,300 41,000 42,200 41,600

57,500 57,200 56,400 56,300 56,500 57,500 59,300 59,700 60,800 62,900 64,700 64,400

80,900 80,600 79,400 80,200 80,700 82,300 84,000 85,200 87,100 90,600 92,500 93,500

178,000 168,900 164,300 170,300 175,800 176,200 189,400 201,200 211,200 228,400 242,900 257,800

65,000 63,700 62,800 63,800 65,400 66,100 70,000 70,400 73,400 77,800 82,100 85,200

257,500 239,800 233,400 245,500 252,700 249,900 275,100 292,700 309,100 340,900 369,100 398,500

370,400 330,800 325,800 347,300 356,900 353,900 389,400 425,000 450,600 498,900 558,400 607,900

887,000 746,800 718,900 835,100 886,600 812,800 976,000 1,056,200 1,165,600 1,323,700 1,580,200 1,799,200

After-Tax Income

15,400 15,800 16,000 15,800 16,400 16,600 17,900 17,700 18,500 19,400 19,800 18,900

31,300 31,600 31,100 30,800 31,000 31,700 33,000 32,800 33,500 35,300 36,300 35,900

46,100 45,800 45,200 45,300 45,700 46,400 47,900 48,300 49,000 51,300 52,700 52,700

63,500 63,100 62,200 63,000 63,400 64,600 66,000 66,900 68,200 71,500 73,000 73,700

133,900 127,200 122,700 127,100 128,200 127,800 136,200 144,300 151,400 164,200 173,400 183,600

51,100 50,100 49,300 50,300 51,100 51,600 54,500 54,800 56,900 60,700 63,600 65,700

191,200 178,600 171,500 180,000 179,000 175,900 191,900 203,600 215,200 238,600 256,400 276,500

271,500 243,500 235,800 250,600 246,100 241,800 263,700 286,900 305,600 341,600 379,500 413,200

636,800 536,200 505,500 581,900 576,300 519,300 618,200 672,200 751,800 872,600 1,040,100 1,190,300

(Continued)
44 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B2-C.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Income (Percent)

Pretax Income

Lowest Quintile 6.3 6.4 6.4 6.5 6.4 6.1 6.2 5.8 6.0 5.9

Second Quintile 13.7 13.9 13.9 13.8 13.2 13.2 13.2 12.6 12.2 12.3

Middle Quintile 20.6 20.7 20.6 20.6 19.7 19.4 19.4 18.2 18.9 18.8

Fourth Quintile 25.6 25.4 25.8 26.0 25.1 24.9 24.8 23.7 24.6 24.4

Highest Quintile 34.1 34.1 34.0 33.9 36.5 37.3 37.1 40.4 39.1 39.7

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 20.7 20.7 20.4 20.4 22.6 23.6 23.4 27.0 25.3 25.9

Top 5 Percent 13.8 13.7 13.6 13.6 15.7 16.4 15.8 19.7 17.8 18.7

Top 1 Percent 5.7 6.0 6.3 6.0 7.8 8.2 7.5 11.1 9.0 9.8

After-Tax Income

Lowest Quintile 7.3 7.4 7.4 7.4 7.2 6.8 7.0 6.5 7.0 6.8

Second Quintile 14.6 14.8 14.8 14.6 13.9 13.8 13.8 13.2 13.0 13.1

Middle Quintile 21.0 21.1 20.9 20.8 20.0 19.7 19.6 18.4 19.4 19.2

Fourth Quintile 25.5 25.2 25.5 25.6 24.9 24.8 24.6 23.5 24.7 24.4

Highest Quintile 32.0 32.1 32.3 32.6 35.1 36.1 36.0 39.3 37.1 37.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 18.9 19.1 19.1 19.5 21.6 22.6 22.6 26.1 23.5 24.4

Top 5 Percent 12.3 12.3 12.5 12.9 14.9 15.6 15.2 19.0 16.3 17.4

Top 1 Percent 4.8 5.2 5.7 5.6 7.2 7.6 7.1 10.6 7.9 8.9

Minimum Adjusted Incomea

 (2000 dollars)

Lowest Quintile 0000000000

Second Quintile 14,400 13,800 13,600 13,200 12,700 13,500 13,500 13,700 13,200 13,600

Middle Quintile 22,800 22,000 21,900 21,400 21,200 22,100 22,500 23,100 23,000 23,500

Fourth Quintile 31,300 30,400 30,600 30,200 30,200 31,600 32,100 33,200 33,400 34,100

Highest Quintile 43,600 42,600 43,000 43,000 43,300 45,200 45,900 47,900 48,500 49,400

Top 10 Percent 55,700 55,100 55,100 55,500 56,200 59,200 60,300 63,000 63,900 65,500

Top 5 Percent 70,700 69,200 69,900 69,500 71,100 75,100 77,000 81,800 81,700 84,000

Top 1 Percent 138,300 134,200 132,400 133,000 138,900 148,500 154,400 179,300 168,200 181,000

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. A household with children has at least one member under age

18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 45

Table B2-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Income (Percent)

Pretax Income

5.9 6.3 6.3 6.1 6.0 6.0 6.0 6.0 5.9 5.9 5.7 5.2

12.2 13.1 13.1 12.8 12.6 12.5 12.6 12.5 12.2 11.9 11.6 10.9

18.7 18.9 18.5 18.3 17.9 18.0 17.2 17.4 16.9 16.3 15.8 15.1

24.2 24.2 24.1 23.8 23.7 23.9 22.7 22.8 22.5 21.9 21.5 21.0

39.9 38.2 38.7 39.6 40.5 40.4 42.2 42.0 43.0 44.5 46.0 48.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

26.5 24.6 24.7 25.6 26.7 26.6 28.3 28.9 30.1 31.6 33.0 35.3

18.9 17.5 17.1 18.1 19.2 18.7 20.7 21.2 22.3 23.9 25.3 27.5

9.9 8.2 8.2 8.7 9.7 9.2 10.6 11.2 11.9 13.3 14.7 16.8

After-Tax Income

7.0 7.3 7.4 7.1 7.1 7.2 7.3 7.4 7.3 7.3 7.0 6.4

13.0 13.9 14.0 13.8 13.7 13.7 13.8 13.7 13.4 13.2 12.9 12.2

19.0 19.2 18.9 18.7 18.5 18.5 17.8 18.1 17.6 17.1 16.6 16.0

24.2 24.1 24.0 23.8 23.9 24.0 22.9 23.0 22.7 22.2 21.9 21.4

38.2 36.6 36.8 37.5 37.8 37.5 39.0 38.7 39.7 41.0 42.4 44.7

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

25.0 23.3 23.1 23.8 24.2 24.0 25.4 25.8 27.0 28.3 29.6 31.8

17.6 16.3 15.7 16.6 16.9 16.4 18.0 18.4 19.5 21.0 22.2 24.2

9.0 7.4 7.3 7.7 8.1 7.5 8.7 9.2 9.9 11.2 12.5 14.4

Minimum Adjusted Incomea

 (2000 dollars)

000000000000

13,900 14,200 14,200 13,800 14,000 14,200 14,900 14,600 15,000 15,700 16,100 15,800

23,900 23,900 23,500 23,600 23,700 24,000 24,800 25,100 25,400 26,400 26,900 26,800

34,400 34,200 33,900 34,200 34,100 34,900 35,500 36,000 36,600 37,900 38,700 38,900

50,100 49,400 48,700 49,300 49,700 50,500 51,800 52,800 54,000 56,100 57,800 58,400

66,500 65,300 64,300 65,500 65,900 66,800 69,200 71,100 73,200 76,400 78,600 80,100

86,100 84,700 83,200 85,900 85,600 87,500 91,000 93,700 98,300 102,500 105,700 108,400

183,600 175,100 171,700 181,600 178,700 184,100 195,800 206,700 219,400 234,000 249,700 257,100

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

a. The minimum adjusted income is the lower income boundary for each quintile.
46 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-A.

Effective Federal Tax Rates for Elderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Total Effective Tax Rate

Lowest Quintile 3.5 2.7 2.2 2.0 2.4 2.7 2.6 2.6 3.1 3.0

Second Quintile 6.6 5.3 4.8 3.9 4.2 4.9 4.7 4.8 4.9 5.1

Middle Quintile 12.2 10.8 9.6 8.0 8.3 8.9 8.7 8.6 9.1 9.4

Fourth Quintile 16.4 15.4 14.2 11.6 12.2 13.0 12.8 12.3 13.7 13.9

Highest Quintile 30.7 28.8 26.7 22.9 22.5 24.3 23.6 22.7 25.8 25.8

All Quintiles 20.2 18.9 17.6 15.1 15.4 16.6 16.2 15.9 17.0 17.4

Top 10 Percent 33.2 31.2 28.9 25.0 24.7 26.2 25.4 23.9 27.7 27.4

Top 5 Percent 35.5 33.4 30.9 26.7 26.3 27.7 26.5 24.9 29.2 29.0

Top 1 Percent 40.2 37.9 34.5 29.4 28.9 29.7 28.4 26.2 31.6 31.3

Effective Individual Income Tax Rate

Lowest Quintile 0 0.1 0.1 0.1 0.1 0 0.1 0.1 0.1 0

Second Quintile 0.5 0.6 0.7 0.6 0.5 0.6 0.6 0.6 0.5 0.6

Middle Quintile 2.5 2.7 2.8 2.7 2.3 2.2 2.4 2.2 2.1 2.4

Fourth Quintile 5.0 5.6 5.8 5.4 5.0 5.1 5.3 4.9 4.9 5.3

Highest Quintile 14.3 15.3 15.7 15.1 13.5 14.4 14.6 14.0 13.9 14.2

All Quintiles 8.2 8.8 9.2 8.9 8.1 8.5 8.8 8.5 7.8 8.3

Top 10 Percent 16.0 17.1 17.5 17.1 15.3 16.2 16.2 15.3 15.4 15.5

Top 5 Percent 17.6 18.7 19.1 18.7 16.7 17.4 17.2 16.3 16.5 16.8

Top 1 Percent 20.9 22.2 22.0 21.1 19.1 19.2 19.1 17.9 18.4 18.9

Effective Social Insurance Tax Rate

Lowest Quintile 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5

Second Quintile 1.6 1.4 1.4 1.3 1.1 1.3 1.3 1.4 1.2 1.3

Middle Quintile 2.6 2.3 2.3 2.2 2.0 2.2 2.1 2.2 2.0 2.0

Fourth Quintile 2.8 2.8 2.6 2.5 2.6 2.6 2.7 2.6 2.8 2.8

Highest Quintile 1.9 1.8 2.0 2.1 2.0 2.1 2.0 1.9 2.0 2.0

All Quintiles 1.9 1.8 1.9 2.0 1.9 2.0 2.0 1.9 2.0 2.0

Top 10 Percent 1.5 1.5 1.7 1.8 1.7 1.7 1.7 1.5 1.6 1.6

Top 5 Percent 1.1 1.2 1.4 1.5 1.4 1.3 1.3 1.2 1.3 1.2

Top 1 Percent 0.5 0.5 0.7 0.8 0.7 0.7 0.8 0.6 0.7 0.6
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 47

Table B3-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Total Effective Tax Rate

2.7 2.8 3.1 3.3 3.4 3.3 3.4 3.4 3.1 3.3 3.4 3.4

4.9 4.9 4.8 4.8 4.8 4.5 4.8 4.7 4.5 4.8 5.3 5.1

8.9 8.9 8.3 8.3 8.5 8.4 8.8 8.8 8.5 8.6 9.0 8.9

13.5 13.3 12.6 12.7 12.9 13.0 13.4 13.2 13.2 13.3 14.2 14.0

24.8 24.3 23.4 24.1 25.5 26.6 27.1 27.5 26.9 25.9 26.2 25.8

16.8 16.5 15.7 16.2 16.9 17.4 18.1 19.1 19.0 18.5 18.9 18.6

26.5 26.0 25.4 26.3 27.9 29.2 29.8 30.2 29.3 27.9 28.1 27.8

27.8 27.5 27.0 28.0 30.3 31.1 32.0 32.1 31.1 29.5 29.7 29.2

29.9 29.7 29.6 31.1 34.1 35.4 35.8 35.8 34.2 32.1 32.0 31.6

Effective Individual Income Tax Rate

0.1 0 0.1 0.1 0 0 0 0 0 0 0 0.1

0.6 0.7 0.6 0.4 0.4 0.3 0.4 0.4 0.4 0.5 0.7 0.7

2.5 2.6 2.4 2.1 2.0 2.1 2.2 2.3 2.4 2.6 2.7 2.9

5.4 5.5 5.1 4.9 4.7 4.6 4.8 4.8 4.9 5.4 6.2 6.5

13.7 13.5 12.8 12.7 12.6 13.2 13.6 14.4 14.6 14.6 15.2 15.4

8.2 8.0 7.5 7.4 7.3 7.5 8.0 9.0 9.3 9.4 9.9 10.1

15.0 14.7 14.2 14.1 14.0 14.7 15.2 16.2 16.2 16.0 16.6 16.9

16.0 15.9 15.3 15.2 15.5 15.8 16.5 17.5 17.4 17.1 17.8 18.1

17.7 17.6 17.3 17.7 18.3 18.5 19.0 20.1 19.8 19.2 19.9 20.1

Effective Social Insurance Tax Rate

0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.6 0.5 0.6 0.6 0.6

1.3 1.4 1.3 1.3 1.2 1.1 1.3 1.3 1.3 1.3 1.6 1.6

1.9 2.1 1.9 1.8 2.0 1.8 2.1 2.0 1.9 2.0 2.0 2.0

2.6 2.6 2.5 2.6 2.6 2.6 2.6 2.5 2.6 2.7 2.9 2.9

1.9 2.1 2.2 2.3 2.2 2.2 2.2 2.1 1.9 2.0 1.9 2.0

1.9 2.1 2.0 2.1 2.0 2.0 2.1 2.0 2.0 2.0 2.0 2.0

1.6 1.8 2.0 2.0 2.0 2.0 2.0 1.9 1.7 1.7 1.7 1.7

1.3 1.4 1.6 1.7 1.6 1.8 1.7 1.6 1.5 1.4 1.4 1.4

0.7 0.7 1.0 0.9 0.9 1.1 1.1 1.0 0.9 0.9 0.9 0.9

(Continued)
48 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-A.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Effective Corporate Income Tax Rate

Lowest Quintile 1.6 1.2 0.7 0.4 0.6 0.7 0.6 0.7 1.0 0.9

Second Quintile 3.3 2.4 1.8 1.1 1.4 1.7 1.6 1.6 1.9 2.0

Middle Quintile 6.0 4.9 3.7 2.3 2.9 3.3 3.0 3.0 3.8 3.7

Fourth Quintile 7.5 6.1 4.9 2.9 3.6 4.3 3.8 3.8 5.1 4.7

Highest Quintile 13.7 11.0 8.4 5.0 6.4 7.2 6.4 6.1 9.1 8.9

All Quintiles 9.2 7.4 5.7 3.5 4.5 5.1 4.6 4.5 6.2 6.1

Top 10 Percent 15.0 12.0 9.2 5.5 7.1 7.8 7.0 6.5 10.0 9.7

Top 5 Percent 16.2 12.9 9.9 6.0 7.6 8.5 7.5 6.8 10.7 10.4

Top 1 Percent 18.2 14.6 11.4 7.1 8.6 9.4 8.2 7.3 11.9 11.3

Effective Excise Tax Rate

Lowest Quintile 1.3 1.1 1.0 1.1 1.4 1.5 1.5 1.4 1.7 1.6

Second Quintile 1.1 0.9 0.8 0.9 1.1 1.3 1.3 1.2 1.3 1.3

Middle Quintile 1.1 0.9 0.8 0.9 1.1 1.2 1.2 1.2 1.2 1.1

Fourth Quintile 1.0 0.9 0.8 0.8 1.0 1.1 1.0 1.0 1.0 1.0

Highest Quintile 0.8 0.7 0.6 0.6 0.7 0.6 0.6 0.7 0.7 0.7

All Quintiles 0.9 0.8 0.7 0.8 0.9 0.9 0.9 0.9 1.0 0.9

Top 10 Percent 0.7 0.6 0.6 0.6 0.6 0.6 0.5 0.6 0.7 0.7

Top 5 Percent 0.7 0.6 0.5 0.5 0.6 0.5 0.5 0.6 0.7 0.6

Top 1 Percent 0.6 0.5 0.4 0.5 0.5 0.4 0.4 0.5 0.5 0.5

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships. An elderly childless household is one headed by a person age 65 or older with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 49

Table B3-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Effective Corporate Income Tax Rate

0.8 0.8 0.8 0.8 1.0 0.9 0.9 0.9 0.7 0.7 0.6 0.7

1.9 1.7 1.5 1.6 1.8 1.6 1.6 1.6 1.4 1.5 1.4 1.4

3.5 3.1 2.8 3.1 3.2 3.2 3.2 3.3 3.0 2.8 2.9 2.8

4.6 4.3 3.9 4.1 4.5 4.7 4.8 4.8 4.6 4.1 3.9 3.5

8.5 8.2 7.7 8.5 10.0 10.5 10.6 10.3 9.7 8.7 8.3 7.7

5.9 5.5 5.1 5.7 6.5 6.7 7.0 7.2 6.8 6.1 5.9 5.5

9.4 9.0 8.6 9.6 11.2 11.9 12.0 11.6 10.8 9.6 9.2 8.6

10.0 9.7 9.5 10.4 12.5 13.0 13.3 12.6 11.8 10.5 10.0 9.2

11.1 11.0 10.9 12.1 14.4 15.4 15.2 14.4 13.2 11.6 10.9 10.3

Effective Excise Tax Rate

1.4 1.5 1.7 1.9 1.9 2.0 2.0 2.0 1.9 1.9 2.1 2.0

1.1 1.2 1.3 1.4 1.4 1.5 1.5 1.4 1.4 1.4 1.6 1.5

1.0 1.1 1.2 1.3 1.3 1.4 1.3 1.2 1.2 1.2 1.4 1.3

0.9 1.0 1.1 1.1 1.1 1.2 1.1 1.1 1.0 1.1 1.2 1.1

0.6 0.6 0.7 0.7 0.8 0.7 0.7 0.6 0.6 0.7 0.7 0.7

0.8 0.9 1.0 1.0 1.1 1.1 1.0 0.9 0.9 0.9 1.0 1.0

0.5 0.5 0.6 0.6 0.7 0.6 0.6 0.5 0.6 0.6 0.6 0.6

0.5 0.5 0.5 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.5

0.4 0.3 0.4 0.4 0.5 0.4 0.4 0.3 0.4 0.4 0.4 0.4

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service. 
50 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-B.

Shares of Tax Liabilities for Elderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Total Federal Tax Liabilities

Lowest Quintile 1.9 1.5 1.1 0.9 0.9 1.0 1.0 0.9 1.0 0.9

Second Quintile 4.3 3.6 3.3 3.1 3.2 3.2 3.0 3.0 3.5 3.4

Middle Quintile 7.6 7.2 7.2 7.4 7.9 7.7 7.7 8.1 8.8 8.8

Fourth Quintile 11.3 12.6 13.3 13.5 14.2 15.1 15.3 14.5 16.2 15.3

Highest Quintile 74.9 75.0 75.0 75.0 73.8 72.9 72.9 73.4 70.4 71.4

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 64.5 64.3 63.9 63.1 61.2 61.3 62.6 63.8 60.2 61.7

Top 5 Percent 56.1 55.1 54.0 53.5 51.2 50.8 53.1 54.8 50.9 51.8

Top 1 Percent 37.4 34.6 32.1 33.0 32.2 33.0 34.7 37.2 31.1 33.6

Share of Individual Income Tax Liabilities

Lowest Quintile 0.1 0.1 0.1 0.1 0 0 0.1 0 0.1 0

Second Quintile 0.9 0.9 0.9 0.8 0.8 0.7 0.7 0.7 0.7 0.8

Middle Quintile 3.9 3.9 4.1 4.2 4.1 3.7 4.0 3.9 4.3 4.8

Fourth Quintile 8.5 9.8 10.5 10.8 11.0 11.5 11.8 10.9 12.5 12.3

Highest Quintile 86.7 85.4 84.5 84.2 84.0 84.0 83.5 84.5 82.4 82.1

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 77.1 75.5 74.0 73.1 72.2 73.4 74.1 75.9 72.4 72.9

Top 5 Percent 68.5 66.2 64.0 63.3 62.0 62.1 64.1 66.7 62.3 62.5

Top 1 Percent 48.2 43.5 39.2 40.1 40.4 41.3 43.4 47.2 39.3 42.3

Share of Social Insurance Tax Liabilities

Lowest Quintile 3.0 2.5 2.0 1.4 1.2 1.3 1.3 1.1 1.1 1.3

Second Quintile 11.5 9.7 9.0 7.7 7.0 7.2 6.7 7.0 7.2 7.3

Middle Quintile 17.1 15.7 15.6 15.4 15.2 15.8 15.2 17.3 16.8 16.6

Fourth Quintile 20.8 23.5 22.4 22.2 24.3 24.6 26.3 25.0 27.9 27.2

Highest Quintile 48.4 48.6 50.9 53.2 52.1 51.0 50.3 49.6 47.0 47.5

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 30.6 31.8 34.0 35.0 34.1 32.5 34.4 33.0 30.2 30.8

Top 5 Percent 18.7 19.9 21.8 23.0 21.5 19.6 21.9 21.5 19.5 18.6

Top 1 Percent 4.5 4.8 5.6 6.8 6.6 6.5 7.5 6.8 5.7 5.6
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 51

Table B3-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Total Federal Tax Liabilities

0.8 1.0 1.2 1.1 1.1 1.0 1.0 0.8 0.7 0.7 0.7 0.8

3.4 3.3 3.3 3.2 3.2 2.9 2.7 2.2 2.0 2.1 2.3 2.2

8.3 8.8 9.8 8.7 8.7 8.9 8.5 7.4 7.2 7.9 8.3 8.1

15.2 15.7 15.5 15.6 14.6 14.1 13.8 12.5 12.0 11.7 11.8 11.9

72.1 71.0 69.9 71.2 72.0 72.8 73.7 76.8 77.8 77.3 76.7 76.6

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

61.0 59.8 57.5 59.6 61.2 61.8 61.6 65.3 65.7 65.3 64.9 64.2

51.1 48.7 47.1 49.1 50.1 52.0 50.6 54.4 55.3 54.0 54.4 53.6

31.0 29.7 28.2 29.4 31.6 32.3 31.5 35.4 35.0 34.8 35.8 33.9

Share of Individual Income Tax Liabilities

0 0 0.1 0 0 0 0 0 0 0 0 0

0.9 0.9 0.8 0.6 0.7 0.5 0.6 0.4 0.4 0.5 0.6 0.6

4.7 5.2 5.8 4.8 4.8 5.0 4.8 4.0 4.2 4.8 4.8 4.8

12.4 13.2 13.2 13.1 12.4 11.4 11.1 9.6 9.2 9.4 9.8 10.2

81.9 80.7 80.1 81.4 82.1 83.0 83.4 85.9 86.2 85.4 84.8 84.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

70.9 69.4 67.4 69.5 71.1 71.6 70.8 74.4 74.1 73.4 73.2 72.0

60.5 57.9 56.0 58.3 59.4 60.8 59.0 63.1 63.1 61.5 62.2 61.1

37.8 36.2 34.6 36.5 39.2 38.8 37.9 42.3 41.3 40.8 42.3 39.8

Share of Social Insurance Tax Liabilities

1.2 1.4 1.6 1.2 1.2 1.0 1.1 1.2 1.1 1.3 1.2 1.4

7.7 7.7 7.1 6.8 6.6 6.0 6.1 5.7 5.6 5.4 6.4 6.3

15.7 17.1 17.2 15.0 16.7 16.4 17.3 15.5 15.6 16.6 17.1 16.5

25.7 24.6 23.6 24.8 24.5 23.9 23.5 22.4 22.8 22.0 22.4 22.2

49.4 49.0 50.2 52.1 50.9 52.3 51.7 55.0 54.6 54.5 52.7 53.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

32.5 32.9 34.2 35.0 35.6 36.3 35.5 38.2 37.6 37.1 36.0 36.4

20.8 20.3 22.2 23.8 21.8 25.3 23.2 25.2 25.1 23.6 23.2 24.1

6.3 5.7 7.1 6.7 6.9 8.8 8.5 9.0 8.7 8.8 9.6 8.6

(Continued)
52 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-B.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Corporate Income Tax Liabilities

Lowest Quintile 1.9 1.6 1.1 0.9 0.8 0.8 0.8 0.8 0.8 0.8

Second Quintile 4.8 4.1 4.0 3.7 3.5 3.6 3.5 3.5 3.8 3.7

Middle Quintile 8.3 8.3 8.4 9.3 9.5 9.4 9.5 9.9 10.1 10.0

Fourth Quintile 11.4 12.8 14.0 14.5 14.3 16.1 15.9 15.9 16.6 14.8

Highest Quintile 73.5 73.1 72.3 71.4 71.7 69.9 69.9 69.8 68.4 70.3

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 63.9 62.7 62.1 60.9 59.9 59.2 60.4 61.1 59.7 62.0

Top 5 Percent 56.2 54.1 53.0 52.5 50.8 50.5 52.6 52.9 51.5 53.0

Top 1 Percent 37.3 34.0 32.4 34.7 32.8 34.0 35.2 36.4 32.2 34.7

Share of Federal Excise Tax Liabilities

Lowest Quintile 14.7 13.3 11.6 9.7 8.7 10.0 10.2 8.3 9.1 9.2

Second Quintile 15.4 14.6 14.0 14.4 14.6 14.7 14.6 13.3 16.4 15.6

Middle Quintile 14.1 14.3 15.2 16.3 17.7 18.2 19.0 19.6 20.0 19.9

Fourth Quintile 15.0 16.9 18.2 19.5 20.3 22.0 22.2 20.3 19.6 19.7

Highest Quintile 40.5 40.6 40.6 39.8 38.4 34.7 33.7 38.3 34.7 35.5

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 30.3 29.9 29.8 28.4 26.5 23.9 24.0 29.7 26.5 27.2

Top 5 Percent 23.2 22.3 22.0 21.2 19.5 16.6 17.6 22.9 20.1 19.9

Top 1 Percent 11.8 10.6 9.9 10.2 9.7 7.9 8.1 12.4 9.4 10.0

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. An elderly childless household is one headed by a person age

65 or older with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 53

Table B3-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Corporate Income Tax Liabilities

0.7 0.8 0.9 0.8 0.8 0.7 0.7 0.5 0.4 0.5 0.5 0.6

3.8 3.3 3.2 3.1 3.1 2.6 2.3 2.0 1.7 2.1 1.9 2.1

9.3 9.2 10.1 9.3 8.6 8.6 8.1 7.5 7.1 7.7 8.5 8.6

14.8 15.0 14.8 14.5 13.2 13.1 12.9 12.2 11.8 10.9 10.3 10.2

71.1 71.1 70.2 71.6 73.7 74.3 75.2 76.9 78.3 78.2 78.1 77.9

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

61.7 61.5 59.5 62.3 64.2 65.0 64.7 66.9 67.7 67.9 68.0 67.1

52.6 51.3 50.5 52.5 53.9 56.2 54.5 56.8 58.1 57.8 58.4 57.2

33.0 32.8 31.8 32.7 34.7 36.3 34.9 37.9 37.5 38.1 38.8 37.3

Share of Federal Excise Tax Liabilities

8.8 9.9 10.0 9.9 9.5 9.1 10.0 9.2 8.4 8.3 8.4 8.9

15.5 14.6 14.3 14.6 14.7 15.4 14.8 13.5 12.5 12.0 12.4 12.2

19.4 20.2 22.7 20.9 21.1 22.8 20.9 20.9 20.7 21.6 22.9 21.9

21.0 21.8 20.4 21.0 19.9 20.0 20.1 20.4 19.2 18.2 18.4 18.1

35.0 33.3 32.3 33.3 34.4 32.1 33.7 35.7 38.9 39.6 37.5 38.5

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

24.6 23.2 21.4 22.8 24.6 21.6 22.0 23.8 26.7 27.6 25.6 26.0

17.5 15.4 14.5 15.5 16.9 15.2 14.5 16.3 19.1 19.3 17.8 18.1

7.5 6.4 5.8 6.3 7.3 6.2 6.1 7.0 8.5 9.0 7.8 7.5

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
54 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-C.

Number of Households, Average Income and Income Shares, and

Income Category Minimums for Elderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Number of Households (Millions)

Lowest Quintile 6.3 6.1 5.6 5.0 4.5 4.8 5.0 4.9 4.7 4.9

Second Quintile 3.6 3.7 3.8 3.9 4.2 3.9 3.9 4.0 4.7 4.7

Middle Quintile 2.3 2.4 2.6 3.0 3.3 3.3 3.4 3.8 4.0 4.0

Fourth Quintile 1.8 2.1 2.3 2.6 2.8 3.0 3.2 3.3 3.3 3.3

Highest Quintile 2.4 2.6 2.8 3.0 3.2 3.1 3.0 3.0 2.8 2.8

All Quintiles 16.5 16.8 17.2 17.6 17.9 18.1 18.6 19.0 19.5 19.7

Top 10 Percent 1.5 1.6 1.7 1.8 1.8 1.8 1.8 1.8 1.7 1.7

Top 5 Percent 0.9 1.0 1.1 1.1 1.1 1.0 1.1 1.1 1.0 1.0

Top 1 Percent 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2

Average Income (2000 dollars)

Pretax Income

Lowest Quintile 10,700 10,500 10,300 9,800 9,400 10,100 9,900 10,000 9,800 10,000

Second Quintile 23,200 22,100 22,000 21,500 20,900 21,900 22,100 22,700 22,400 22,700

Middle Quintile 34,900 34,100 34,100 33,200 32,800 34,700 35,300 36,200 36,300 37,100

Fourth Quintile 49,200 47,500 48,100 47,600 47,300 50,000 50,800 53,200 53,000 53,200

Highest Quintile 128,100 120,600 117,800 116,300 117,600 128,300 140,700 160,700 144,800 157,500

All Quintiles 38,200 37,900 39,100 40,200 41,300 43,600 45,100 48,800 44,700 46,400

Top 10 Percent 167,700 154,400 151,600 153,200 158,300 172,900 189,300 214,700 189,400 206,600

Top 5 Percent 216,600 196,800 191,600 196,600 208,900 232,100 250,000 291,400 250,300 290,800

Top 1 Percent 434,800 394,900 392,600 400,100 449,800 476,400 545,200 640,600 555,300 711,500

After-Tax Income

Lowest Quintile 10,300 10,200 10,000 9,600 9,200 9,800 9,700 9,700 9,500 9,700

Second Quintile 21,700 21,000 20,900 20,700 20,000 20,800 21,000 21,600 21,300 21,500

Middle Quintile 30,600 30,400 30,800 30,500 30,100 31,600 32,200 33,100 33,000 33,600

Fourth Quintile 41,100 40,200 41,300 42,100 41,600 43,500 44,300 46,600 45,700 45,800

Highest Quintile 88,800 85,800 86,400 89,700 91,100 97,100 107,500 124,200 107,500 116,900

All Quintiles 30,500 30,700 32,200 34,100 34,900 36,400 37,700 41,000 37,100 38,400

Top 10 Percent 112,000 106,200 107,800 115,000 119,200 127,700 141,300 163,300 137,000 149,900

Top 5 Percent 139,600 131,100 132,500 144,100 154,100 167,800 183,700 218,800 177,300 206,400

Top 1 Percent 260,200 245,200 257,300 282,500 319,700 334,900 390,500 472,600 380,000 488,900
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 55

Table B3-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of Households (Millions)

4.9 5.2 5.4 5.1 5.0 5.1 5.2 4.8 4.8 4.8 4.9 5.3

4.8 4.4 4.2 4.3 4.6 4.7 4.4 4.2 4.1 4.0 4.0 4.2

4.0 4.2 4.5 4.3 4.4 4.8 4.7 4.7 4.9 5.3 5.5 5.5

3.3 3.5 3.4 3.5 3.4 3.4 3.6 3.7 3.7 3.5 3.4 3.4

3.1 3.2 3.2 3.2 3.2 3.2 3.5 3.8 4.0 4.0 3.9 4.1

20.1 20.4 20.8 20.4 20.6 21.2 21.4 21.4 21.5 21.6 21.8 22.6

1.8 1.9 1.8 1.8 1.9 1.8 2.0 2.1 2.2 2.3 2.2 2.2

1.1 1.1 1.0 1.0 1.0 1.1 1.1 1.2 1.2 1.2 1.2 1.2

0.3 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Average Income (2000 dollars)

Pretax Income

10,100 10,100 10,100 9,700 9,900 9,900 10,500 10,200 10,500 11,000 11,400 11,200

23,100 23,400 23,300 23,400 23,200 23,300 24,200 24,300 24,600 26,400 27,200 26,500

37,200 37,300 36,900 36,900 37,400 37,500 38,700 39,000 39,900 41,200 41,800 41,700

53,700 52,800 52,100 52,700 52,800 54,100 54,700 55,800 57,200 60,200 62,200 63,500

149,900 143,500 135,600 141,600 141,600 146,100 146,700 158,700 166,000 175,000 185,900 183,900

47,100 46,100 44,100 45,700 45,700 46,400 48,900 53,300 56,100 59,000 60,800 59,900

200,100 188,800 183,400 190,000 187,000 196,500 199,100 219,800 234,200 244,300 263,300 264,800

269,400 259,500 244,000 258,300 260,000 258,300 277,700 308,600 329,200 355,300 384,200 383,000

628,000 613,200 567,100 629,500 600,300 622,600 650,100 771,000 865,100 939,800 1,020,500 1,077,500

After-Tax Income

9,800 9,800 9,800 9,400 9,600 9,600 10,100 9,900 10,100 10,700 11,000 10,800

21,900 22,200 22,200 22,300 22,100 22,200 23,100 23,100 23,500 25,100 25,800 25,200

33,900 34,000 33,800 33,800 34,300 34,400 35,400 35,600 36,500 37,600 38,000 38,000

46,500 45,800 45,500 46,000 46,000 47,100 47,400 48,400 49,700 52,200 53,400 54,600

112,800 108,700 103,800 107,500 105,500 107,300 107,000 115,100 121,300 129,600 137,200 136,500

39,100 38,500 37,200 38,300 38,000 38,300 40,100 43,100 45,500 48,100 49,300 48,800

147,000 139,700 136,800 140,100 134,900 139,100 139,800 153,500 165,500 176,100 189,200 191,300

194,400 188,000 178,300 186,100 181,300 178,100 188,800 209,400 226,800 250,300 270,100 271,000

440,500 431,200 399,200 433,600 395,900 402,200 417,600 494,900 569,300 637,900 693,700 736,900

(Continued)
56 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B3-C.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Income (Percent)

Pretax Income

Lowest Quintile 10.8 10.0 8.6 6.9 5.7 6.1 5.9 5.3 5.3 5.4

Second Quintile 13.3 12.8 12.3 11.9 11.8 10.8 10.3 9.8 12.1 11.6

Middle Quintile 12.6 12.6 13.3 14.0 14.6 14.4 14.5 15.0 16.5 16.3

Fourth Quintile 13.9 15.5 16.5 17.7 17.8 19.2 19.5 18.8 20.0 19.1

Highest Quintile 49.5 49.2 49.5 49.7 50.4 49.7 50.1 51.4 46.4 48.1

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 39.3 38.9 38.9 38.3 38.2 38.8 40.1 42.4 37.0 39.1

Top 5 Percent 32.0 31.2 30.8 30.3 30.0 30.4 32.6 35.0 29.7 31.0

Top 1 Percent 18.9 17.3 16.4 17.0 17.1 18.4 19.9 22.6 16.7 18.7

After-Tax Income

Lowest Quintile 13.1 12.0 10.2 8.0 6.6 7.1 6.9 6.1 6.2 6.3

Second Quintile 15.6 14.9 14.3 13.5 13.3 12.3 11.8 11.1 13.9 13.3

Middle Quintile 13.9 13.9 14.5 15.2 15.8 15.8 15.8 16.3 18.1 17.9

Fourth Quintile 14.6 16.1 17.2 18.4 18.5 20.1 20.3 19.6 20.8 19.9

Highest Quintile 43.0 43.2 44.0 45.1 46.1 45.1 45.7 47.3 41.5 43.2

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 32.9 33.0 33.6 33.9 34.0 34.3 35.7 38.4 32.2 34.3

Top 5 Percent 25.8 25.6 25.8 26.2 26.1 26.4 28.6 31.2 25.3 26.6

Top 1 Percent 14.2 13.2 13.0 14.2 14.4 15.5 17.0 19.8 13.8 15.5

Minimum Adjusted Incomea

 (2000 dollars)

Lowest Quintile 0000000000

Second Quintile 14,400 13,800 13,600 13,200 12,700 13,500 13,500 13,700 13,200 13,600

Middle Quintile 22,800 22,000 21,900 21,400 21,200 22,100 22,500 23,100 23,000 23,500

Fourth Quintile 31,300 30,400 30,600 30,200 30,200 31,600 32,100 33,200 33,400 34,100

Highest Quintile 43,600 42,600 43,000 43,000 43,300 45,200 45,900 47,900 48,500 49,400

Top 10 Percent 55,700 55,100 55,100 55,500 56,200 59,200 60,300 63,000 63,900 65,500

Top 5 Percent 70,700 69,200 69,900 69,500 71,100 75,100 77,000 81,800 81,700 84,000

Top 1 Percent 138,300 134,200 132,400 133,000 138,900 148,500 154,400 179,300 168,200 181,000

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. An elderly childless household is one headed by a person age

65 or older with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 57

Table B3-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Income (Percent)

Pretax Income

5.2 5.6 6.0 5.3 5.3 5.1 5.2 4.4 4.1 4.2 4.2 4.4

11.6 11.0 10.8 10.8 11.3 11.1 10.1 9.0 8.4 8.2 8.2 8.2

15.6 16.4 18.3 17.1 17.3 18.3 17.4 16.1 16.1 17.0 17.4 17.0

19.0 19.4 19.4 19.8 19.2 18.8 18.7 18.1 17.3 16.3 15.7 15.9

49.0 48.2 46.7 47.8 47.7 47.6 49.3 53.5 54.9 55.2 55.3 55.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

38.7 37.9 35.4 36.7 37.1 36.7 37.4 41.4 42.6 43.3 43.6 43.1

30.9 29.2 27.4 28.5 27.9 29.1 28.6 32.4 33.8 33.9 34.6 34.1

17.5 16.5 14.9 15.3 15.7 15.8 15.9 18.9 19.4 20.1 21.1 20.0

After-Tax Income

6.1 6.5 6.8 6.1 6.1 5.9 6.1 5.2 5.0 5.0 5.0 5.2

13.3 12.5 12.2 12.2 13.0 12.9 11.8 10.7 9.9 9.6 9.6 9.6

17.1 17.9 19.9 18.7 19.1 20.2 19.4 18.1 18.2 19.1 19.6 19.1

19.7 20.1 20.1 20.7 20.1 19.8 19.7 19.4 18.6 17.4 16.7 16.8

44.4 43.7 42.4 43.3 42.7 42.3 43.9 48.0 49.6 50.2 50.3 50.5

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

34.2 33.6 31.3 32.3 32.2 31.5 32.0 35.8 37.2 38.3 38.7 38.2

26.8 25.3 23.7 24.5 23.4 24.3 23.7 27.2 28.7 29.3 30.0 29.7

14.8 13.9 12.5 12.6 12.4 12.4 12.5 15.0 15.8 16.7 17.7 16.8

Minimum Adjusted Incomea

 (2000 dollars)

000000000000

13,900 14,200 14,200 13,800 14,000 14,200 14,900 14,600 15,000 15,700 16,100 15,800

23,900 23,900 23,500 23,600 23,700 24,000 24,800 25,100 25,400 26,400 26,900 26,800

34,400 34,200 33,900 34,200 34,100 34,900 35,500 36,000 36,600 37,900 38,700 38,900

50,100 49,400 48,700 49,300 49,700 50,500 51,800 52,800 54,000 56,100 57,800 58,400

66,500 65,300 64,300 65,500 65,900 66,800 69,200 71,100 73,200 76,400 78,600 80,100

86,100 84,700 83,200 85,900 85,600 87,500 91,000 93,700 98,300 102,500 105,700 108,400

183,600 175,100 171,700 181,600 178,700 184,100 195,800 206,700 219,400 234,000 249,700 257,100

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

a. The minimum adjusted income is the lower income boundary for each quintile.
58 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-A.

Effective Federal Tax Rates for Nonelderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Total Effective Tax Rate

Lowest Quintile 11.1 10.9 11.5 11.0 12.0 12.7 13.0 12.5 13.3 13.2

Second Quintile 16.3 16.2 16.8 15.8 15.6 16.3 16.9 16.6 16.3 16.7

Middle Quintile 19.6 20.0 20.5 19.3 19.0 19.6 19.9 19.9 19.6 19.9

Fourth Quintile 22.3 22.5 23.5 22.2 21.5 21.9 22.0 22.2 21.7 22.1

Highest Quintile 27.6 27.6 27.7 25.3 24.5 24.8 24.6 24.5 26.1 26.0

All Quintiles 24.3 24.4 24.8 23.0 22.4 22.7 22.9 22.9 23.7 23.8

Top 10 Percent 29.2 29.0 28.7 26.0 25.1 25.4 25.1 24.8 27.3 26.8

Top 5 Percent 31.3 30.5 29.6 26.5 25.6 26.0 25.5 24.9 28.5 27.7

Top 1 Percent 36.4 34.2 31.5 27.7 27.5 28.2 27.0 25.5 31.4 29.5

Effective Individual Income Tax Rate

Lowest Quintile 1.0 1.3 1.5 1.3 1.3 1.5 1.4 1.0 0.4 0.3

Second Quintile 5.0 5.4 5.7 5.0 4.6 4.8 4.9 4.7 4.0 4.1

Middle Quintile 8.1 8.7 8.9 8.1 7.5 7.5 7.6 7.5 6.9 7.0

Fourth Quintile 10.8 11.3 11.8 10.8 9.8 9.6 9.6 9.6 8.9 8.9

Highest Quintile 16.2 17.0 17.1 15.6 14.2 14.0 14.0 14.1 14.8 14.8

All Quintiles 12.8 13.5 13.8 12.7 11.6 11.4 11.5 11.6 11.7 11.9

Top 10 Percent 17.7 18.5 18.5 16.9 15.4 15.3 15.2 15.3 16.6 16.5

Top 5 Percent 19.5 20.1 19.9 18.3 16.7 16.7 16.5 16.5 18.5 18.2

Top 1 Percent 22.6 23.1 21.8 20.7 19.6 19.6 19.1 18.6 22.2 21.2

Effective Social Insurance Tax Rate

Lowest Quintile 6.7 6.7 7.2 7.1 7.3 7.3 8.0 8.0 8.3 8.9

Second Quintile 8.6 8.4 9.1 9.0 8.8 9.1 9.8 9.7 9.8 10.2

Middle Quintile 9.2 9.2 9.7 9.7 9.7 10.1 10.5 10.6 10.6 11.0

Fourth Quintile 9.4 9.4 10.1 10.0 10.0 10.4 10.8 11.0 10.9 11.4

Highest Quintile 6.6 6.7 7.4 7.6 7.7 7.9 7.8 7.7 8.1 7.9

All Quintiles 7.7 7.7 8.4 8.5 8.5 8.8 8.9 8.9 9.1 9.1

Top 10 Percent 5.5 5.6 6.3 6.6 6.6 6.6 6.5 6.3 6.7 6.4

Top 5 Percent 3.8 4.1 4.7 5.0 5.1 5.0 4.8 4.5 5.1 4.7

Top 1 Percent 1.2 1.3 1.6 2.0 2.0 1.8 1.6 1.4 1.9 1.6
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 59

Table B4-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Total Effective Tax Rate

12.8 13.6 13.2 13.2 12.7 11.6 11.8 11.3 11.4 11.1 11.3 10.7

16.5 16.9 16.6 16.1 16.2 16.2 16.4 16.0 16.4 15.8 16.2 15.7

19.9 20.0 19.8 19.6 19.5 19.8 19.7 19.7 19.9 19.7 19.7 19.6

22.0 22.2 22.1 21.7 21.6 21.7 21.9 21.8 21.9 22.0 22.0 22.0

25.7 25.7 26.0 26.1 26.9 27.6 27.9 28.0 28.2 27.9 28.3 28.3

23.5 23.7 23.7 23.8 24.2 24.6 24.8 24.8 25.1 24.7 25.0 25.0

26.5 26.5 26.9 27.2 28.5 29.3 29.6 29.8 29.8 29.4 29.7 29.7

27.2 27.2 27.9 28.3 30.1 31.2 31.4 31.6 31.5 30.9 31.1 31.1

28.8 28.6 30.1 30.5 34.3 35.7 35.9 35.8 34.9 33.6 33.7 33.3

Effective Individual Income Tax Rate

0.3 0.6 0.3 0 -0.1 -1.5 -1.0 -1.1 -0.9 -1.2 -1.3 -1.5

4.0 4.3 4.0 3.6 3.5 3.2 3.5 3.4 3.5 3.2 3.4 3.1

7.0 7.0 6.8 6.6 6.6 6.5 6.4 6.5 6.7 6.5 6.5 6.5

9.0 9.0 8.9 8.6 8.5 8.5 8.6 8.6 8.7 8.8 8.9 8.9

14.6 14.5 14.5 14.7 14.8 15.0 15.4 15.9 16.3 16.4 16.9 17.2

11.6 11.7 11.5 11.6 11.6 11.7 11.8 12.2 12.6 12.5 12.9 13.1

16.2 16.1 16.1 16.4 16.8 17.0 17.4 18.1 18.4 18.5 19.1 19.3

17.8 17.7 17.8 18.3 18.9 19.3 19.6 20.4 20.7 20.7 21.2 21.4

20.5 20.4 21.2 21.8 23.7 23.7 24.2 25.0 24.5 24.1 24.7 24.5

Effective Social Insurance Tax Rate

9.1 9.3 9.2 9.1 8.9 8.9 8.9 8.9 9.0 9.1 9.2 8.9

10.3 10.5 10.3 10.0 10.1 10.2 10.3 10.3 10.4 10.4 10.6 10.4

11.1 11.2 11.1 11.0 10.9 11.1 11.1 11.1 11.3 11.3 11.4 11.4

11.2 11.6 11.5 11.4 11.2 11.3 11.5 11.4 11.5 11.5 11.4 11.5

8.0 8.1 8.5 8.3 8.6 8.7 8.6 8.4 8.0 7.9 7.8 7.6

9.2 9.4 9.7 9.5 9.6 9.7 9.7 9.5 9.3 9.3 9.2 9.0

6.6 6.7 7.4 7.0 7.5 7.6 7.4 7.1 6.7 6.5 6.4 6.3

4.8 4.9 5.8 5.4 5.9 6.0 5.8 5.5 5.1 4.9 4.9 4.7

1.8 1.8 2.6 2.3 2.6 3.0 2.8 2.7 2.4 2.2 2.3 2.3

(Continued)
60 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-A.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Effective Corporate Income Tax Rate

Lowest Quintile 1.3 1.2 1.0 0.7 0.9 1.4 0.9 1.0 1.2 1.0

Second Quintile 1.2 1.0 0.8 0.6 0.7 0.9 0.7 0.7 0.9 0.8

Middle Quintile 1.1 1.0 0.8 0.5 0.7 0.8 0.7 0.7 0.9 0.9

Fourth Quintile 1.1 1.0 0.8 0.5 0.7 0.8 0.7 0.7 0.9 0.8

Highest Quintile 4.1 3.3 2.6 1.6 1.9 2.2 2.1 2.0 2.6 2.6

All Quintiles 2.8 2.3 1.8 1.2 1.4 1.6 1.6 1.5 1.9 2.0

Top 10 Percent 5.4 4.3 3.3 2.0 2.5 2.8 2.7 2.6 3.3 3.4

Top 5 Percent 7.4 5.7 4.5 2.7 3.3 3.8 3.6 3.3 4.4 4.4

Top 1 Percent 12.1 9.4 7.7 4.8 5.6 6.3 5.8 5.1 6.9 6.4

Effective Excise Tax Rate

Lowest Quintile 2.1 1.8 1.7 1.9 2.4 2.4 2.7 2.5 3.3 3.0

Second Quintile 1.6 1.4 1.2 1.2 1.5 1.5 1.5 1.5 1.6 1.6

Middle Quintile 1.3 1.1 1.0 1.0 1.1 1.2 1.2 1.1 1.2 1.2

Fourth Quintile 1.0 0.9 0.8 0.8 1.0 1.0 1.0 0.9 1.0 1.0

Highest Quintile 0.8 0.7 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.6

All Quintiles 1.0 0.8 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9

Top 10 Percent 0.7 0.6 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.5

Top 5 Percent 0.6 0.5 0.5 0.5 0.5 0.5 0.6 0.5 0.5 0.5

Top 1 Percent 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.3

Source: Congressional Budget Office.

Notes: Effective tax rates are calculated by dividing taxes by comprehensive household income. A household consists of the people who share a housing unit, regardless

of their relationships. An nonelderly childless household is one headed by a person under age 65 and with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 61

Table B4-A.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Effective Corporate Income Tax Rate

0.9 0.9 0.9 1.0 0.9 0.8 1.0 0.9 0.8 0.7 0.7 0.8

0.8 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.6 0.6 0.6

0.7 0.7 0.7 0.6 0.7 0.7 0.8 0.8 0.7 0.6 0.6 0.5

0.8 0.7 0.7 0.6 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.6

2.5 2.5 2.2 2.4 2.8 3.1 3.3 3.2 3.3 3.0 2.9 2.9

1.8 1.8 1.6 1.8 2.0 2.2 2.3 2.3 2.3 2.1 2.0 2.0

3.2 3.2 2.9 3.1 3.6 4.1 4.2 4.1 4.2 3.8 3.7 3.6

4.1 4.1 3.7 4.1 4.8 5.4 5.5 5.3 5.3 4.9 4.6 4.5

6.2 6.2 6.0 6.1 7.6 8.7 8.6 7.9 7.6 7.1 6.5 6.2

Effective Excise Tax Rate

2.5 2.8 2.8 3.1 3.0 3.4 2.9 2.6 2.5 2.5 2.7 2.5

1.4 1.5 1.6 1.7 1.8 1.9 1.8 1.6 1.6 1.5 1.6 1.5

1.1 1.1 1.2 1.3 1.3 1.5 1.4 1.3 1.2 1.2 1.3 1.2

0.9 0.9 1.0 1.1 1.1 1.2 1.1 1.0 1.0 1.0 1.0 1.0

0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6

0.8 0.8 0.9 1.0 1.0 1.1 1.0 0.9 0.9 0.9 0.9 0.8

0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5

0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service. 
62 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-B.

Shares of Tax Liabilities for Nonelderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Total Federal Tax Liabilities

Lowest Quintile 1.5 1.5 1.5 1.5 1.6 1.9 1.7 1.6 1.4 1.3

Second Quintile 4.9 4.7 4.8 4.7 4.7 5.1 5.1 4.7 4.8 4.7

Middle Quintile 9.2 9.3 9.7 9.5 9.8 10.0 9.9 9.7 9.4 8.9

Fourth Quintile 19.1 19.2 19.5 19.4 20.1 19.3 19.1 19.1 18.8 18.5

Highest Quintile 65.2 65.3 64.4 64.8 63.7 63.5 64.0 64.8 65.5 66.4

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 46.5 45.7 44.8 44.5 44.3 44.1 44.5 45.5 46.1 47.8

Top 5 Percent 31.5 30.7 29.4 29.0 29.2 29.6 30.2 31.1 31.6 34.2

Top 1 Percent 14.6 13.3 11.7 12.3 12.4 13.2 14.0 14.7 14.9 18.0

Share of Individual Income Tax Liabilities

Lowest Quintile 0.2 0.3 0.4 0.3 0.3 0.5 0.3 0.3 0.1 0.1

Second Quintile 2.8 2.8 2.9 2.7 2.7 3.0 3.0 2.6 2.4 2.3

Middle Quintile 7.2 7.3 7.6 7.3 7.5 7.6 7.5 7.2 6.7 6.3

Fourth Quintile 17.5 17.4 17.7 17.2 17.7 17.0 16.7 16.3 15.6 15.0

Highest Quintile 72.2 72.2 71.4 72.5 71.8 71.9 72.5 73.7 75.2 76.4

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 53.4 52.7 51.9 52.6 52.8 53.2 53.8 55.4 56.9 59.2

Top 5 Percent 37.1 36.5 35.5 36.5 36.9 37.9 39.0 40.6 41.6 45.2

Top 1 Percent 17.1 16.2 14.6 16.7 17.1 18.3 19.8 21.1 21.4 25.9

Share of Social Insurance Tax Liabilities

Lowest Quintile 2.8 2.8 2.8 2.6 2.5 2.9 2.6 2.6 2.2 2.3

Second Quintile 8.2 7.8 7.7 7.2 7.0 7.3 7.6 7.0 7.4 7.5

Middle Quintile 13.7 13.5 13.6 13.1 13.2 13.4 13.3 13.3 13.2 12.8

Fourth Quintile 25.6 25.3 24.7 23.9 24.7 24.0 24.0 24.5 24.7 24.9

Highest Quintile 49.6 50.5 51.1 53.1 52.5 52.4 52.3 52.5 52.4 52.5

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 27.6 28.0 29.1 30.6 30.6 29.9 29.6 29.7 29.5 29.7

Top 5 Percent 12.3 13.1 13.9 14.9 15.1 14.8 14.7 14.5 14.6 15.0

Top 1 Percent 1.6 1.7 1.8 2.4 2.3 2.2 2.2 2.1 2.3 2.5
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 63

Table B4-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Total Federal Tax Liabilities

1.3 1.5 1.5 1.4 1.4 1.2 1.4 1.2 1.2 1.3 1.3 1.2

4.8 4.7 4.7 4.3 4.3 4.4 4.4 4.3 4.2 4.2 4.2 4.1

9.7 9.4 9.5 9.3 9.1 9.0 9.2 8.8 8.6 8.5 8.3 8.3

18.8 18.8 19.1 18.2 18.2 18.1 18.6 17.9 17.3 17.9 17.6 17.4

65.2 65.4 65.0 66.5 66.8 67.1 66.2 67.6 68.5 68.0 68.5 68.9

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

46.1 46.8 47.0 48.9 48.9 49.5 49.4 50.4 51.5 51.0 52.1 53.1

32.2 33.0 33.0 35.0 35.3 35.9 35.6 37.1 38.4 38.1 39.5 40.5

15.8 17.0 16.0 18.6 18.1 19.5 18.9 20.4 22.2 22.1 22.6 23.8

Share of Individual Income Tax Liabilities

0.1 0.1 0.1 0 0 -0.3 -0.3 -0.2 -0.2 -0.3 -0.3 -0.3

2.4 2.5 2.3 2.0 2.0 1.8 2.0 1.8 1.8 1.7 1.7 1.6

6.9 6.7 6.8 6.4 6.4 6.3 6.3 5.9 5.8 5.6 5.3 5.2

15.7 15.5 15.9 14.8 15.0 15.0 15.3 14.4 13.7 14.2 13.7 13.4

75.0 75.3 74.9 76.8 76.7 77.3 76.7 78.1 78.9 78.9 79.5 80.1

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

57.0 57.9 57.9 60.6 60.1 60.7 60.9 62.2 63.5 63.5 64.9 65.9

42.6 43.7 43.5 46.5 46.3 46.8 46.7 48.8 50.2 50.5 52.1 53.3

22.7 24.7 23.4 27.2 26.1 27.3 26.8 29.0 31.1 31.2 32.0 33.5

Share of Social Insurance Tax Liabilities

2.4 2.5 2.6 2.5 2.5 2.4 2.7 2.5 2.6 2.8 2.9 2.7

7.6 7.4 7.1 6.8 6.8 7.0 7.0 7.1 7.3 7.4 7.5 7.5

13.6 13.2 13.0 13.2 12.8 12.7 13.3 13.0 13.2 13.1 13.0 13.3

24.5 24.7 24.5 24.2 24.0 23.9 24.8 24.4 24.3 25.1 24.9 25.1

51.7 52.1 52.7 53.2 53.9 53.9 52.1 52.8 52.5 51.5 51.6 51.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

29.2 29.8 31.8 32.0 32.2 32.5 31.8 31.5 31.1 30.2 30.7 31.1

14.6 15.1 17.0 16.9 17.4 17.7 16.8 17.0 16.6 16.0 16.9 17.1

2.5 2.6 3.4 3.5 3.5 4.2 3.8 4.0 4.2 3.9 4.2 4.5

(Continued)
64 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-B.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Corporate Income Tax Liabilities

Lowest Quintile 1.5 1.6 1.7 2.0 2.0 3.0 1.8 1.9 1.6 1.2

Second Quintile 3.0 3.2 2.9 3.3 3.4 3.8 3.2 3.0 3.3 2.6

Middle Quintile 4.4 5.1 5.3 5.1 5.6 5.8 5.3 5.0 5.2 4.7

Fourth Quintile 8.1 8.7 9.1 9.0 10.0 9.5 8.7 8.6 9.2 8.3

Highest Quintile 82.5 81.0 80.4 79.8 78.3 76.9 80.0 80.5 79.2 81.9

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 73.1 70.4 70.0 68.7 68.7 67.7 71.1 71.7 69.3 73.3

Top 5 Percent 63.3 59.9 59.7 60.1 59.7 59.0 62.6 63.2 60.1 65.5

Top 1 Percent 41.4 38.3 38.6 42.3 40.2 40.8 44.6 44.3 40.9 47.3

Share of Federal Excise Tax Liabilities

Lowest Quintile 7.0 7.0 7.2 7.5 7.8 8.6 8.5 8.4 8.6 8.1

Second Quintile 11.6 11.3 11.2 10.9 11.0 11.4 11.2 11.2 12.0 12.1

Middle Quintile 14.8 14.8 15.5 14.2 14.6 14.5 14.3 14.1 14.5 14.1

Fourth Quintile 21.5 21.4 20.9 21.3 22.3 21.5 20.6 20.6 21.8 22.5

Highest Quintile 44.5 44.9 44.2 45.6 43.5 43.3 44.6 45.0 42.5 42.8

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 27.2 27.4 27.1 27.1 26.1 25.9 27.6 28.5 25.5 25.8

Top 5 Percent 15.3 15.8 15.5 15.1 15.0 14.7 16.6 17.4 14.5 15.1

Top 1 Percent 4.2 4.4 4.3 4.3 4.1 4.0 5.2 6.2 4.5 5.0

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. An nonelderly childless household is one headed by a person

under age 65 and with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 65

Table B4-B.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Corporate Income Tax Liabilities

1.2 1.2 1.6 1.4 1.1 0.9 1.3 1.0 0.9 0.9 1.0 1.1

2.9 2.4 2.7 2.6 2.5 2.5 2.4 2.3 2.1 2.0 2.0 1.9

4.6 4.2 4.7 4.1 4.1 3.7 3.9 4.0 3.3 3.3 2.9 2.8

8.6 7.8 8.2 7.0 7.6 7.0 7.3 7.3 6.5 6.6 7.0 6.3

81.3 82.5 81.1 83.0 83.0 84.0 83.4 84.2 86.0 86.3 86.1 87.0

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

71.9 74.1 72.4 75.3 74.9 76.5 75.5 75.8 78.0 79.1 79.0 79.9

63.2 65.7 64.0 67.0 67.2 69.3 67.2 67.4 69.9 71.7 71.4 72.3

44.3 48.4 45.8 49.7 48.0 52.9 48.9 49.2 52.6 55.1 53.1 55.0

Share of Federal Excise Tax Liabilities

7.3 8.6 8.2 8.3 8.1 8.3 8.4 7.7 8.0 8.2 8.5 8.4

11.6 11.7 11.5 11.7 11.5 12.1 11.8 11.8 12.1 11.8 11.7 12.0

15.1 14.9 14.9 15.3 15.1 15.3 15.7 15.8 14.8 15.0 15.0 15.3

22.5 22.2 22.8 22.1 21.7 22.3 23.5 22.7 22.2 22.9 22.8 22.6

42.9 42.1 42.1 41.9 42.7 41.1 39.9 41.4 42.2 41.7 41.7 41.4

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

25.4 24.7 25.5 25.3 25.8 24.8 24.1 24.6 25.6 24.8 25.5 25.6

14.8 14.0 15.0 14.7 15.1 14.3 13.6 14.3 15.0 14.5 15.5 15.5

4.6 4.5 4.5 4.6 4.3 4.4 4.1 4.3 5.1 4.9 5.2 5.6

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.
66 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-C.

Number of Households, Average Income and Income Shares, and

Income Category Minimums for Nonelderly Childless Households,

by Household Income Category, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Number of Households (Millions)

Lowest Quintile 5.1 5.3 5.5 5.5 5.6 6.5 5.9 6.2 5.3 5.4

Second Quintile 5.1 5.2 5.3 5.2 5.5 5.7 6.0 5.8 6.5 6.7

Middle Quintile 5.3 5.5 5.8 5.8 6.0 6.1 6.2 6.3 6.6 6.7

Fourth Quintile 6.8 7.0 7.0 7.0 7.4 7.2 7.5 7.6 8.1 8.4

Highest Quintile 9.5 9.8 10.0 10.2 10.2 10.1 10.6 10.6 11.0 11.3

All Quintiles 32.0 32.8 33.8 33.9 34.9 35.8 36.4 36.7 37.7 38.8

Top 10 Percent 5.0 5.1 5.3 5.3 5.3 5.2 5.4 5.4 5.5 5.7

Top 5 Percent 2.3 2.4 2.5 2.5 2.6 2.5 2.6 2.6 2.6 2.8

Top 1 Percent 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5

Average Income (2000 dollars)

Pretax Income

Lowest Quintile 10,700 10,300 10,100 9,800 9,300 9,900 9,900 10,100 9,900 10,300

Second Quintile 23,800 22,900 22,800 22,500 21,900 23,200 23,200 23,700 23,200 23,700

Middle Quintile 35,700 34,800 34,600 34,200 34,200 35,700 36,400 37,600 37,300 37,800

Fourth Quintile 50,900 49,900 50,400 50,200 50,600 52,500 53,200 55,300 55,700 56,300

Highest Quintile 101,100 98,500 98,500 99,900 102,400 109,000 112,100 122,600 118,400 128,800

All Quintiles 52,200 50,900 50,600 51,200 51,100 52,500 54,900 58,300 57,800 61,500

Top 10 Percent 129,500 127,000 125,600 128,400 132,200 143,000 149,300 165,400 158,300 176,900

Top 5 Percent 177,500 170,700 167,000 175,500 177,700 194,800 207,400 236,700 219,700 253,800

Top 1 Percent 420,500 403,100 389,900 430,500 435,100 492,200 547,300 660,800 552,900 713,900

After-Tax Income

Lowest Quintile 9,500 9,100 9,000 8,700 8,200 8,600 8,700 8,800 8,600 8,900

Second Quintile 19,900 19,200 19,000 18,900 18,500 19,400 19,200 19,700 19,400 19,700

Middle Quintile 28,700 27,800 27,500 27,600 27,700 28,700 29,100 30,100 30,000 30,200

Fourth Quintile 39,600 38,700 38,600 39,100 39,700 41,000 41,500 43,000 43,600 43,900

Highest Quintile 73,200 71,300 71,300 74,600 77,300 82,000 84,500 92,600 87,500 95,400

All Quintiles 39,500 38,500 38,100 39,400 39,700 40,600 42,300 45,000 44,100 46,800

Top 10 Percent 91,600 90,100 89,600 95,000 99,000 106,700 111,800 124,500 115,100 129,400

Top 5 Percent 121,900 118,600 117,500 129,000 132,100 144,100 154,500 177,700 157,100 183,600

Top 1 Percent 267,300 265,100 267,000 311,200 315,200 353,600 399,800 492,300 379,500 503,300
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 67

Table B4-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of Households (Millions)

5.5 5.6 5.9 5.8 6.0 6.0 6.7 6.7 7.3 7.7 7.8 8.2

6.6 6.5 6.5 6.5 6.3 6.6 6.5 6.9 7.1 7.4 7.5 7.9

7.1 7.0 7.1 7.2 7.1 7.2 7.4 7.4 7.6 7.8 7.9 8.4

8.4 8.6 8.7 8.7 8.7 8.9 9.1 9.2 9.4 9.9 10.0 10.3

11.1 11.5 11.5 11.6 11.5 11.6 11.3 11.7 11.8 11.9 12.0 12.1

38.9 39.3 39.9 39.9 39.8 40.6 41.2 42.1 43.3 44.8 45.4 47.1

5.6 5.8 6.0 6.0 5.9 5.9 5.9 5.9 5.9 5.9 6.1 6.3

2.7 2.8 2.9 2.9 2.9 2.8 2.7 2.9 2.8 2.8 2.9 3.0

0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Average Income (2000 dollars)

Pretax Income

10,600 10,900 11,000 10,900 10,600 10,700 11,000 10,700 10,800 11,300 12,000 11,300

24,400 24,700 24,200 24,100 24,500 24,800 25,800 25,700 26,200 27,400 27,900 27,800

38,300 38,200 37,900 38,400 38,000 38,500 39,600 40,200 40,900 42,000 43,000 42,900

56,900 56,300 55,900 56,300 56,400 57,200 58,400 59,700 60,400 62,700 64,300 64,600

127,600 126,800 122,100 127,800 124,600 128,200 132,700 138,300 148,100 155,500 163,500 169,700

61,000 61,200 59,300 61,100 60,100 61,200 61,800 63,900 66,100 68,500 71,200 71,800

173,700 173,400 163,000 174,000 167,700 174,600 179,500 191,100 208,700 222,100 232,500 241,800

247,200 247,700 227,300 249,900 232,900 250,200 260,000 274,900 313,600 337,800 347,900 368,900

664,700 688,300 587,900 666,500 594,400 660,500 696,700 759,100 905,700 1,018,900 1,041,200 1,104,800

After-Tax Income

9,200 9,400 9,600 9,400 9,200 9,500 9,700 9,500 9,500 10,100 10,600 10,100

20,400 20,500 20,200 20,200 20,600 20,800 21,600 21,600 21,900 23,000 23,400 23,400

30,700 30,600 30,400 30,900 30,600 30,900 31,800 32,200 32,800 33,700 34,500 34,500

44,400 43,800 43,500 44,100 44,200 44,800 45,600 46,700 47,100 48,900 50,200 50,400

94,900 94,300 90,400 94,400 91,100 92,900 95,700 99,500 106,400 112,100 117,300 121,700

46,700 46,700 45,200 46,500 45,600 46,100 46,500 48,100 49,600 51,600 53,400 53,900

127,800 127,400 119,100 126,700 119,900 123,400 126,400 134,100 146,500 156,800 163,300 170,000

180,000 180,500 164,000 179,200 162,700 172,100 178,300 187,900 214,900 233,500 239,600 254,300

473,100 491,100 411,000 463,100 390,800 424,600 446,800 487,100 589,800 676,500 690,100 737,400

(Continued)
68 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table B4-C.

Continued

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Share of Income (Percent)

Pretax Income

Lowest Quintile 3.2 3.3 3.2 3.1 2.9 3.4 2.9 2.9 2.4 2.3

Second Quintile 7.3 7.1 7.1 6.8 6.7 7.1 6.9 6.4 6.9 6.7

Middle Quintile 11.4 11.4 11.8 11.4 11.6 11.6 11.4 11.1 11.3 10.7

Fourth Quintile 20.9 20.9 20.6 20.2 20.9 20.1 19.8 19.7 20.6 20.0

Highest Quintile 57.4 57.7 57.7 58.9 58.2 58.4 59.5 60.6 59.5 61.0

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 38.7 38.5 38.7 39.4 39.6 39.5 40.5 42.0 40.1 42.4

Top 5 Percent 24.4 24.6 24.6 25.2 25.5 25.8 27.1 28.5 26.3 29.4

Top 1 Percent 9.7 9.5 9.2 10.2 10.1 10.6 11.9 13.1 11.3 14.5

After-Tax Income

Lowest Quintile 3.8 3.8 3.8 3.6 3.3 3.9 3.3 3.3 2.8 2.7

Second Quintile 8.1 7.9 7.8 7.4 7.3 7.7 7.5 6.9 7.6 7.3

Middle Quintile 12.1 12.0 12.4 11.9 12.1 12.1 11.8 11.5 11.9 11.2

Fourth Quintile 21.4 21.4 21.0 20.4 21.2 20.3 20.1 19.8 21.1 20.4

Highest Quintile 54.9 55.2 55.5 57.2 56.7 56.8 58.2 59.3 57.7 59.3

All Quintiles 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Top 10 Percent 36.2 36.2 36.7 37.9 38.2 38.1 39.4 40.9 38.2 40.8

Top 5 Percent 22.2 22.6 23.0 24.1 24.4 24.7 26.1 27.7 24.6 27.9

Top 1 Percent 8.2 8.3 8.4 9.6 9.4 9.9 11.3 12.7 10.2 13.4

Minimum Adjusted Incomea

 (2000 dollars)

Lowest Quintile 0000000000

Second Quintile 14,400 13,800 13,600 13,200 12,700 13,500 13,500 13,700 13,200 13,600

Middle Quintile 22,800 22,000 21,900 21,400 21,200 22,100 22,500 23,100 23,000 23,500

Fourth Quintile 31,300 30,400 30,600 30,200 30,200 31,600 32,100 33,200 33,400 34,100

Highest Quintile 43,600 42,600 43,000 43,000 43,300 45,200 45,900 47,900 48,500 49,400

Top 10 Percent 55,700 55,100 55,100 55,500 56,200 59,200 60,300 63,000 63,900 65,500

Top 5 Percent 70,700 69,200 69,900 69,500 71,100 75,100 77,000 81,800 81,700 84,000

Top 1 Percent 138,300 134,200 132,400 133,000 138,900 148,500 154,400 179,300 168,200 181,000

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships. An nonelderly childless household is one headed by a person

under age 65 and with no member under age 18.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX B DISTRIBUTIONAL ESTIMATES BY INCOME CATEGORY, 1979 TO 2000 69

Table B4-C.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of Income (Percent)

Pretax Income

2.4 2.5 2.7 2.6 2.6 2.6 2.9 2.7 2.7 2.8 2.9 2.7

6.8 6.6 6.7 6.4 6.4 6.6 6.6 6.6 6.5 6.6 6.5 6.5

11.4 11.1 11.3 11.3 11.3 11.2 11.6 11.1 10.9 10.7 10.5 10.6

20.2 20.1 20.6 20.0 20.5 20.5 21.0 20.4 19.7 20.1 20.0 19.7

59.8 60.5 59.5 60.7 60.1 59.9 58.8 59.9 60.9 60.3 60.6 60.9

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

41.0 41.9 41.4 42.9 41.5 41.6 41.3 42.0 43.3 43.0 43.8 44.7

27.9 28.8 28.1 29.5 28.4 28.3 28.1 29.2 30.5 30.5 31.7 32.6

12.9 14.1 12.7 14.5 12.8 13.5 13.1 14.2 16.0 16.3 16.7 17.9

After-Tax Income

2.8 2.9 3.1 2.9 3.0 3.0 3.4 3.2 3.2 3.3 3.4 3.3

7.5 7.2 7.3 7.1 7.1 7.4 7.4 7.4 7.2 7.4 7.3 7.3

11.9 11.6 11.9 11.9 11.9 11.9 12.3 11.8 11.6 11.4 11.2 11.4

20.6 20.5 21.0 20.6 21.2 21.3 21.8 21.3 20.6 20.9 20.8 20.5

58.1 58.9 57.7 58.8 57.9 57.6 56.4 57.4 58.4 57.7 57.9 58.2

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

39.5 40.4 39.7 41.0 39.2 39.0 38.7 39.2 40.6 40.3 41.1 41.9

26.5 27.5 26.6 27.8 26.1 25.9 25.6 26.5 27.9 28.0 29.1 29.9

12.0 13.2 11.6 13.2 11.1 11.5 11.1 12.1 13.9 14.4 14.8 15.9

Minimum Adjusted Incomea

 (2000 dollars)

000000000000

13,900 14,200 14,200 13,800 14,000 14,200 14,900 14,600 15,000 15,700 16,100 15,800

23,900 23,900 23,500 23,600 23,700 24,000 24,800 25,100 25,400 26,400 26,900 26,800

34,400 34,200 33,900 34,200 34,100 34,900 35,500 36,000 36,600 37,900 38,700 38,900

50,100 49,400 48,700 49,300 49,700 50,500 51,800 52,800 54,000 56,100 57,800 58,400

66,500 65,300 64,300 65,500 65,900 66,800 69,200 71,100 73,200 76,400 78,600 80,100

86,100 84,700 83,200 85,900 85,600 87,500 91,000 93,700 98,300 102,500 105,700 108,400

183,600 175,100 171,700 181,600 178,700 184,100 195,800 206,700 219,400 234,000 249,700 257,100

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers. Corporate income taxes are distributed to households according to their share of capital income.

Federal excise taxes are distributed to them according to their consumption of the taxed good or service.

a. The minimum adjusted income is the lower income boundary for each quintile.

c

Households Whose Payroll Taxes

Exceed Their Income Taxes,

1979 to 2000

Most households pay more payroll taxes than

income taxes. Table C-1 shows the percentage of households whose payroll taxes exceed their income taxes for

the 1979-2000 period, breaking down those statistics

by household income quintile. The calculations are also

shown including both the employer and employee shares

of payroll taxes and including only the employee share.

APPENDIX
72 EFFECTIVE FEDERAL TAX RATES, 1997 TO 2000

Table C-1.

Percentage of Households Whose Payroll Taxes Exceed Their Income Taxes,

by Household Income Quintile, 1979 to 2000

Income Category 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Households That Pay Either Payroll or Income Taxes

Including the Employee and Employer Shares of Payroll Taxes

Lowest Quintile 97.5 96.7 96.1 95.5 95.7 93.7 95.7 95.8 97.4 97.6

Second Quintile 89.6 87.8 87.5 88.5 88.5 89.7 89.1 89.7 90.8 90.3

Middle Quintile 65.4 56.6 60.3 69.1 75.3 78.1 78.3 78.8 80.5 78.6

Fourth Quintile 30.0 24.8 29.1 38.8 50.1 55.8 59.8 61.3 69.7 71.6

Highest Quintile 7.9 6.6 8.6 13.0 18.6 23.4 25.9 27.0 27.7 30.6

All Quintiles 53.0 49.2 51.1 55.9 61.2 64.6 66.2 67.0 70.0 70.7

Including Only the Employee Share of Payroll Taxes

Lowest Quintile 93.6 90.7 89.8 90.7 92.1 89.6 92.6 93.2 95.8 96.3

Second Quintile 45.5 41.1 39.7 47.4 52.0 51.9 54.3 57.3 67.4 69.3

Middle Quintile 14.5 12.4 13.3 16.1 19.1 21.3 22.0 23.7 27.7 29.9

Fourth Quintile 4.5 4.1 4.4 6.0 6.9 8.6 8.8 9.3 9.8 10.7

Highest Quintile 1.7 1.9 2.0 2.9 2.9 3.8 4.1 3.6 2.8 2.6

All Quintiles 26.2 24.6 24.2 26.6 28.5 29.9 30.8 31.8 34.8 36.0

Households That Pay Payroll Taxes

Including the Employee and Employer Shares of Payroll Taxes

Lowest Quintile 99.1 99.0 98.7 98.4 98.6 98.1 98.5 99.0 99.3 99.3

Second Quintile 94.6 92.9 93.5 94.6 94.4 94.9 95.1 95.5 96.1 96.0

Middle Quintile 71.6 62.5 67.6 78.5 85.2 87.1 89.3 89.3 91.3 90.3

Fourth Quintile 32.6 27.3 32.5 44.0 55.8 62.6 67.3 69.0 78.1 80.3

Highest Quintile 8.8 7.4 9.8 14.6 20.7 26.0 28.6 29.7 30.4 33.5

All Quintiles 57.2 53.4 56.1 61.7 67.0 70.6 72.6 73.4 76.3 77.3

Including Only the Employee Share of Payroll Taxes

Lowest Quintile 95.1 92.7 92.2 93.5 94.8 93.8 95.3 96.2 97.6 97.9

Second Quintile 48.1 43.4 42.4 50.7 55.4 54.9 57.9 61.0 71.3 73.6

Middle Quintile 15.8 13.7 14.9 18.3 21.5 23.8 25.0 26.9 31.4 34.3

Fourth Quintile 4.9 4.5 5.0 6.8 7.7 9.6 9.9 10.5 11.0 12.0

Highest Quintile 1.9 2.1 2.3 3.2 3.2 4.2 4.5 4.0 3.1 2.9

All Quintiles 28.2 26.6 26.6 29.3 31.2 32.7 33.7 34.8 37.9 39.3

Source: Congressional Budget Office.

Notes: A household consists of the people who share a housing unit, regardless of their relationships.

The income measure is comprehensive household income, which comprises pretax cash income plus income from other sources. Pretax cash income is the

sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement

benefits plus taxes paid by businesses (corporate income taxes; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll

taxes); and employees’ contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid

health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are

excluded from the lowest income category but are included in totals.
APPENDIX C HOUSEHOLDS WHOSE PAYROLL TAXES EXCEED THEIR INCOME TAXES, 1979 TO 2000 73

Table C-1.

Continued

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Households That Pay Either Payroll or Income Taxes

Including the Employee and Employer Shares of Payroll Taxes

97.6 97.3 97.3 97.4 97.6 98.1 97.9 98.0 97.8 97.7 98.0 97.7

90.0 90.7 91.3 91.6 91.6 93.0 92.6 92.4 92.6 92.1 92.0 91.8

79.6 79.1 78.3 80.5 81.0 80.2 81.4 80.7 79.8 78.9 78.2 78.3

69.8 72.0 73.4 74.6 74.8 75.3 75.1 74.0 73.8 74.9 73.6 73.5

29.0 31.9 33.6 36.2 36.3 36.0 34.3 32.7 30.1 30.0 27.7 26.3

70.1 71.3 71.9 73.2 73.4 73.6 73.5 72.7 71.9 72.0 71.1 70.6

Including Only the Employee Share of Payroll Taxes

96.1 95.4 95.7 95.9 96.2 96.9 96.6 96.3 96.2 96.0 96.4 96.1

67.8 67.6 70.5 74.5 75.0 76.9 73.7 73.8 72.4 75.0 74.2 74.2

27.4 28.4 29.4 33.8 34.9 34.2 34.4 34.2 31.7 40.7 41.5 41.4

10.4 11.2 11.4 12.7 13.0 13.1 13.9 13.3 12.8 16.3 16.7 17.0

2.7 3.2 3.8 3.4 3.3 3.2 3.1 3.1 2.9 3.0 3.0 2.8

35.2 35.7 36.6 38.4 38.7 38.8 38.8 38.7 37.9 41.4 41.7 41.3

Households That Pay Payroll Taxes

Including the Employee and Employer Shares of Payroll Taxes

99.3 99.2 99.3 99.2 99.3 99.4 99.4 99.3 99.3 99.3 99.4 99.3

96.0 96.2 96.2 96.2 96.3 96.8 96.5 96.6 96.7 96.6 96.7 96.8

90.6 90.8 90.5 92.0 91.2 91.6 92.4 91.6 90.9 91.2 91.1 90.9

78.6 81.2 83.0 84.2 83.5 83.9 83.9 83.1 82.5 82.9 81.2 80.8

32.1 35.2 37.3 39.7 39.8 39.4 37.9 36.4 33.7 33.5 30.9 29.3

76.9 78.2 79.0 80.0 79.7 79.9 79.9 79.2 78.4 78.7 77.7 77.2

Including Only the Employee Share of Payroll Taxes

97.8 97.2 97.6 97.7 97.9 98.1 98.1 97.6 97.7 97.6 97.7 97.6

72.2 71.6 74.2 78.2 78.7 79.9 76.8 77.1 75.5 78.7 78.0 78.2

31.2 32.5 34.0 38.7 39.3 39.0 39.1 38.8 36.1 47.1 48.4 48.0

11.7 12.6 12.9 14.3 14.6 14.6 15.6 14.9 14.3 18.0 18.5 18.7

3.0 3.5 4.2 3.7 3.7 3.5 3.4 3.4 3.2 3.3 3.4 3.1

38.5 39.1 40.2 41.9 42.0 42.1 42.2 42.2 41.4 45.2 45.5 45.2

Notes: (Continued)

Income categories are defined by ranking all people by their comprehensive household income adjusted for household size—that is, divided by the square

root of the household’s size. Quintiles, or fifths, contain equal numbers of people.

Individual income taxes are distributed directly to households paying those taxes. Social insurance, or payroll, taxes are distributed to households paying those

taxes directly or paying them indirectly through their employers.

This publication and others by CBO

are available at the agency's Web site:

www.cbo.gov