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 some 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.

Since 1988, the highest marginal income tax rate has ranged from 28 percent to 39.6 percent. Verify here
On balance, the evidence suggests that reducing tax rates boosts work and saving relative to what would occur otherwise, if budget deficits are held the same. But without any other changes in taxes or spending, reducing tax rates from current levels will generally lower revenues and increase budget deficits. Increased deficits, even with lower tax rates, can reduce economic activity over the longer term.  Verify here
The child credit, the education credits, and other provisions in Taxpayer Relief Act of 1997 will combine to lower the effective individual income tax rate the amount of federal income tax owed divided by income for almost all taxpayersVerify here
The crucial point is that taxes raise the price of taxed activities and thereby lower the relative price of other things. In particular, the income tax reduces the returns from working (the after-tax wage), which lowers the price of other activities relative to working; it also reduces the returns from saving (the after-tax rate of return), which lowers the price of current spending relative to saving for spending in the future. Verify here
Households generally bear the economic cost, or burden, of the taxes that they pay directly, such as individual income taxes (including taxes paid on dividends, interest, and capital gains) and employees’ share of payroll taxes. Households also bear the burden of the taxes paid by businesses.  Verify here
In particular, in CBO’s judgment (and that of most economists), employers’ share of payroll taxes is passed on to employees in the form of lower wages.  Verify here
In addition, households bear the burden of corporate income taxes, but the extent to which they bear that burden as owners of capital, workers, or consumers is not clear.   Verify here
…the various credits, deductions, and multiple tax rates on capital gains in Taxpayer Relief Act of 1997 increase the complexity of tax returns for many taxpayersVerify at Page 11
 Some of the features in Taxpayer Relief Act of 1997 were specifically designed to reduce the complexity of the U.S. tax code.  For example, the act virtually eliminates taxes on capital gains from home sales (thus reducing the need for most homeowners to keep records), raises the income threshold for paying estimated taxes, increases the standard deduction for taxpayers claimed as a dependent on another tax return, raises the unified credit for estate and gift taxes so fewer estates are taxable, and eases some rules relating to foreign-source income.  The act also simplifies several requirements for businesses, particularly in regard to calculating liability for the alternative minimum tax (AMT) and reporting income from certain foreign investments.  Verify here at Page 11
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