Chart Detail

Tax rate, transfer rate, and tax rate net of transfers, by income group, 1979–2007

All households Household income fifth Breakdown of top 10 percent
Bottom Second Middle Fourth Top 90th–<95th percentile 95th–<99th percentile Top 1 percent
1979
Effective tax rate 22.2% 8.0% 14.3% 18.6% 21.2% 27.5% 28.7% 30.5% 37.0%
Transfer rate 8.3 45.2 19.2 8.4 4.9 2.6 0.4 0.4 0.2
Tax rate net of transfers 13.9 -37.2 -4.9 10.2 16.3 24.9 28.3 30.1 36.8
2007
Effective tax rate 20.4% 4.0% 10.6% 14.3% 17.4% 25.1% 25.9% 27.5% 29.5%
Transfer rate 9.1 32.3 20.1 15.6 10.4 3.5 2.9 1.9 0.6
Tax rate net of transfers 11.3 -28.3 -9.5 -1.3 7.0 21.6 23.0 25.6 28.9
Percentage-point change,
1979–2007
Effective tax rate -1.8 -4.0 -3.7 -4.3 -3.8 -2.4 -2.8 -3.0 -7.5
Transfer rate 0.8 -12.8 0.9 7.2 5.5 1.0 2.5 1.5 0.4
Tax rate net of transfers -2.6 8.8 -4.6 -11.5 -9.3 -3.4 -5.3 -4.5 -7.9

Note: Income groups reflect comprehensive income.

Source: Authors' analysis of Congressional Budget Office (2010 and 2010b)

Updated May 21, 2012

Documentation and methodology

Underlying data are from the Congressional Budget Office Average Federal Taxes by Income Group, “Average Federal Tax Rates for All Households, by Comprehensive Household Income Quintile, 1979–2007,” “Sources of Income for All Households, by Household Income Category 1979 to 2007” [Excel spreadsheets] and unpublished data related to the same report on the composition of in-kind income, with a breakout for health spending (both government transfers and employer-sponsored insurance benefits). The tax rate is taken directly from the first Excel spreadsheet cited here, while the transfer rate is calculated as the share of cash transfers and Medicare and Medicaid spending in comprehensive income.

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