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Historical Effective Federal Tax Rates: 1979-2002 1 (March 2005)

handle is hein.congrec/cbo0827 and id is 1 raw text is: Historical Effective Federal Tax Rates: 1979 to 2002 March 2005 The following tables update the series of historical effective lax rates estimated by the Congressional Budget Office (C3O) by providing values for an additional year--2002.' The tables show effective tax rates for the four largest sources of' federal revenues--individual income taxes, corporate income taxes, payroll taxes, and excise taxes--as well as the total effective rate For the four taxes combined. The tables also present average pretax and after-tax household income; counts of' households; and shares of taxes, income, and households for each fifth (quintile) of the income distribution and for the top percentiles ol'houscholds. Tax Law Changes in 2002 Cornpared to those in 2001, effective tax rates in 2002 were affected by two major tax bills. The provisions of the Economic Growth and Tax Relief* Reconciliation Act of 2001 (EGTRRA) continued to phase in, lowering the effective individual income tax rate. In 2002, EGTRRA reduced the statutory tax rates for the top four brackets below their 2001 levels, increased the income range over which married couples could claim the earned income tax credit, and allowed for higher tax credits to offset child and dependent care expenses. '[he Job Creation and Worker Assistance Act of 2002 (JCWAA) lowered effective rates for both the individual income and corporate income taxes by increasing depreciation allowances for some property and altering tax rules concerning operating losses.' Effective Tax Rates in 2002 The overall effective tax rate fell by 0.7 percentage points, firom 21,4 percent in 2001 to 20.7 percent in 2002, largely because of a 0.7 percentage point drop in the effective individual income tax rate. Tihe effective corporate income tax rate fbll by 0.3 percentage points, while the effective social insurance tax rate rose by an equivalent amount. A combination of tax law changes and income changes accounted for the drop in effective individual tax rate. EGTRJ(A lowered rates and increased credits, while I. See .ongreaional Budget Office, Effective Federal Twt Rates 1997 to 2000 (August 2003), An update extended the sries to 2001; see Effective Federal Tax Rates: 1979-2001 (April 2104), available at wvw,cb.gov. 2. For a mare detailed deseription of legislative chung.es to the tax law, wc Congressional Budget Office. Effective Federal Ttix Rates Under Current Lwa 2001 to 2014 (August 2004).

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