Effective tax rates: income, payroll, corporate and estate taxes combined
July 01, 2013

SOURCE: Data from TPC, Baseline Average Effective Federal Tax Rates by Cash Income Percentile; 2014, July 2013. Compiled by PGPF
NOTE: *Individual income tax rates for the lowest and second lowest quintiles are negative and are netted against the payroll tax rate. A quintile is one fifth of the population. Calculations assume that employees also pay the employer portion of payroll taxes in the form of reduced wages. The breaks are (in 2013 dollars): 20% $24,191; 40% $47,261; 60% $79,521; 80% $134,266; 90% $180,482; 95% $261,471; 99% $615,048; 99.9% $3,170,865.

Too often, discussions about the federal tax code are clouded and confused because they focus on only one part of our federal tax system — usually the individual income tax — and ignore the fact that Americans pay many other taxes. Viewed in aggregate, our tax system is generally progressive, with higher-income taxpayers paying a larger share of their income in taxes. However, taxpayers at different ends of the income distribution pay different types of taxes. For low-income Americans, the payroll tax is the dominant tax; for high-income Americans, individual and corporate income taxes are important parts of their effective tax rate.

For a full discussion of the effective tax rates borne by taxpayers with different levels of income, see PGPF's complete chart deck: How Much Do People Pay in Federal Taxes?

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