Taxes – Fast Facts

All fast facts for taxes are from the non-partisan Congressional Budget Office (CBO) and one from the Tax Policy Center. Although they represent many of their most recent reports on this subject, they do not represent all of their reports on this subject.  Occasionally minor word adjustments may have been made for clarity or to reflect the updated nature of the statement.   As always, verify and view statements in their full context as often as possible.

The largest source of federal revenues, the individual income tax, has average tax rates that rise rapidly with income.  The next largest source of revenues, social insurance taxes, has average tax rates that vary little across most income groups–although the average rate falls for higher-income households, because earnings above a certain threshold are not subject to the Social Security payroll tax and because earnings are a smaller portion of total income for that group. The average social insurance tax rate is higher than the average individual income tax rate for all income groups except the highest quintile.   Verify here
Between 1979 and 2007, the average tax rate for federal taxes combined declined for all income groups. The average individual income tax rate also declined over those years; the largest decrease occurred for the fifth of the population with the lowest incomeVerify here
Among the different types of taxes, social insurance taxes pose the greatest liability for all quintiles except the highest, for which individual income tax is larger.  Verify here
With the lowest income quintile paying 8.8% social insurance tax rate and the highest income quintile paying 5.7% social insurance tax rate in 2007, the lowest income quintile pays a higher social insurance tax rate than the highest income quintile.  Verify here
At 42.9% in 2007, the highest income quintile pays a larger share of social insurance taxes than every other income quintile.  Verify here
As of 2007, the first four income tax quintiles have lower federal tax liabilities now than they did in 1979, and the highest income quintile has higher federal tax liabilities than they did in 1979.  Verify here
The earned income tax credit is a refundable tax credit directed toward low-income workers.   Verify here at Page
Average federal tax rates are now lower for all filers than they were in 1979.  Verify here
The Alternative Minimum Tax (AMT) was originally intended to impose taxes on high-income individuals who used tax preferences to greatly reduce or eliminate their liability under the regular income tax.  However, unlike the regular income tax, the AMT is not indexed for inflation. As a result, the AMT will affect significantly larger numbers of taxpayers over time under current law, and lawmakers have acted repeatedly since 2001 to slow the expansion of the AMT and prevent it from affecting more taxpayers outside of higher-income groups.  Verify at Page 33
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