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Historical Effective Federal Tax Rates: 1979 to 2003 1 (December 2005)

handle is hein.congrec/cbo0875 and id is 1 raw text is: Historical Effective Federal Tax Rates: 1979 to 2003 December 2005 The following tables update the series of historical effective tax rates estimated by the Congressional Budget Office (CBO) by providing values for an additional calendar year: 2003.1 The tables show effective tax rates for the four largest sources of federal revenues-individual income taxes, social insurance (payroll) taxes, corporate income 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 distributinn and for the top percentiles of households. Tax Law Changes in 2003 Several aspects of tax law changed in 2003 as provisions of the Econotimic Growth and 'Thx Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) took effect.2 The changes included: n Statutory individual income tax rates for the top four brackets declined to 25, 28, 33, and 35 percent (from 27, 30, 35, and 38.6 percent, respectively, in 2002). a The child tax Lredit rose to $1,000 per child (from $600). e The tax rate on capital gains fell to a maximum of 15 percent (from 20 percent). n Most dividends were subject to a maximum tax rate of 15 percent (rather than to the statutory individual income tax rates). a For married couples filing jointly, the standard deduction and the 15 percent bracket grew to be twice as large as those for taxpayers filing singly (from 1.67 times as large). a The exemption amount under the alternative minimum tax increased. 0 Businesses were allowed to take larger depreciation allowances for purchases of some property. 1. Lffective tax rates equal the amount of tax liability divided by income. See Congressional Budget Office, Efqceive Federal Tax Rates, 1979-1997 (October 2001), and Ejjfcive 1edeml Tax Rarer, 1997 to 2000 (August 2003), as well as Web-only updates that extended the period of analysis to 2001 and 2002. 2. For a inote detailed description of legislative changes to tax law, see Congressional Budget Office, rffiktive Federal 7lax Raes Under Current Law 2001 to 2014 (Aigust 2004).

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