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The Distribution of Payroll and Income Tax Burdens, 1979-99

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  • Mitrusi, Andrew
  • Poterba, James M.
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    Abstract

    This paper presents new evidence on the level and distribution of income and payroll tax burdens for U.S. families over the 1979-99 period. During this period, payroll taxes have become an increasingly important component of the tax burden for many low- and middle-income families. This paper uses a new and expanded version of the National Bureau of Economic Research (NBER) TAXSIM program to analyze the impact of legislative changes in income and payroll taxes. Averaged over all families, the combined 1999 payroll and income tax burden was quite similar to what it would have been if the 1979 income and payroll tax laws had remained in force for the last two decades, with only inflation-based adjustments to tax brackets. The mix of income and payroll taxes has changed, however. As a result of the expansion of the Earned Income Tax Credit in the late 1980s and early 1990s, as well as other changes in the federal personal income tax, payroll tax liabilities now exceed income tax liabilities for nearly two-thirds of families. In 1979, payroll taxes exceeded income taxes for 44 percent of families.

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    Bibliographic Info

    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 53 (2000)
    Issue (Month): n. 3 (September)
    Pages: 765-94

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    Handle: RePEc:ntj:journl:v:53:y:2000:i:n._3:p:765-94

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    1. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, vol. 84(1), pages 1-32, April.
    2. Joel Slemrod & Jon Bakija, 2000. "Does Growing Inequality Reduce Tax Progressivity? Should It?," NBER Working Papers 7576, National Bureau of Economic Research, Inc.
    3. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
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    Cited by:
    1. Bargain, Olivier & Dolls, Mathias & Immervoll, Herwig & Neumann, Dirk & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian, 2014. "Tax policy and income inequality in the US, 1979-2007," ZEW Discussion Papers 14-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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