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1 Claire M. Hintz, Tax Burden on American Families Rises Again 1 (1997)

handle is hein.taxfoundation/srhexz0001 and id is 1 raw text is: TAX FOUNDATION November 1997 No. 74 Tax Burden on American Families Rises Again In 1997, the tax burden on America's median income families increased again. This year federal, state and local taxes combined are projected to claim 38.2 percent of the income of a median income two-earner family, up from 37.3 percent in 1996. For a single- earner family, total taxes as a percentage of income are projected to increase to 35.6 Figure 1 Taxes as a Percentage of Income for Median One- and Two-ncome Families Selected Yeaws, 1955-1997 YOne Income - Two Income o.oo\o .o\o Coo\o\ob + ' . 40% 35% 30% 25% 20% 15% 10% 5% 0% 0\o .o\oa Coor 1955 1965 1975 1985 1995 1997e Source: Tax Foundation. percent, up from 35.5 percent last year. For the dual-earner family, the tax burden is approaching its historic high. In 1981, before the federal income tax reduction and bracket indexation of the Economic Recovery Act of 1981 took effect, the dual-income family used 38.9 percent of its income to pay for its taxes. Table 1 charts the historical evolution of the tax burden borne by median income single and dual-earner families. The tax burden is calculated on a decade by decade basis from 1955 through 1985 and yearly thereafter. Since 1955, the tax burden as a percentage of income has grown 10.3 percentage points for two-income families; for single income families, it has grown almost 9 percentage points. As Table 1 shows, after adjusting for inflation, total taxes on the median income dual-earner family today are $22,521, nearly triple 1955's burden when they were $8,089. In real (inflation-adjusted) dollars, the pro- jected total tax burden of the median income two-earner family will be higher than in any previous year. For the single-income family, total taxes (adjusted for inflation) have almost doubled from $6,024 in 1955 to $11,002 in 1997. However, the median income single-earner family will be paying less in real terms by the standards of the Eighties and Nineties due to the declining real income of families of this kind. The Growth of Taxation Two forces have driven the increasing burden of taxation on America's median- income families in recent years: the growth of the federal payroll tax and a general increase in state and local taxation. Payroll taxes for social insurance have By Claire M. Iintz Senior Economist Tax Foundation

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