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Income Taxation of U.S. Households: Basic Facts

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Author Info

  • Guner, Nezih

    ()
    (MOVE, Barcelona)

  • Kaygusuz, Remzi

    ()
    (Sabanci University)

  • Ventura, Gustavo

    ()
    (Arizona State University)

Abstract

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

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5549.

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Length: 30 pages
Date of creation: Mar 2011
Date of revision:
Publication status: forthcoming in Review of Economic Dynamics, 2014
Handle: RePEc:iza:izadps:dp5549

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Keywords: households; tax progressivity; taxation;

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  1. Díaz-Giménez, Javier & Pijoan-Mas, Josep, 2006. "Flat Tax Reforms in the US: A Boon for the Income Poor," CEPR Discussion Papers 5812, C.E.P.R. Discussion Papers.
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Cited by:
  1. Aspen Gorry & Ezra Oberfield, 2012. "Optimal Taxation Over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(4), pages 551-572, October.
  2. Nezih Guner, 2011. "Taxing Women: A Macroeconomic Analysis," 2011 Meeting Papers 581, Society for Economic Dynamics.
  3. Guner, Nezih & Kaygusuz, Remzi & Ventura, Gustavo, 2013. "Childcare Subsidies and Household Labor Supply," CEPR Discussion Papers 9775, C.E.P.R. Discussion Papers.

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