Congressional Budget Office / Federal Taxes
June 21, 2010    Disclosures    POSTED IN  EconomyTax & Estate Planning
A June 2010 report released by the Congressional Budget Office analyzes federal tax rates up to an including 2007. For 2007, the last year before the current recession, the bottom fifth of income distribution, average pretax income of $18,400 or less, paid 4% of their income in federal taxes. The top fifth of income distribution, average pretax income of $264,700 or more, paid 25.1% of their income in federal taxes.
Average Federal Tax Rates, 2007

The average federal tax rate since 1979 has varied for all quintiles. While the tax rate of the bottom four quintiles has generally decreased from 1979-2007 the highest quintile average tax rate has fluctuated.
Average Federal Tax Rate by Income Quintile, 1979-2007
Since 1979 the growth in after-tax income has risen for all chorts though at an uneven pace. The real (inflation adjusted) after tax income of  the top 1% of all income earners in a given year has increased dramaticly since 1979. The other 99% of the income distribution has increased at a more modest pace.
Cumulative Change in Real After-Tax Average Income
The average pre-tax income for the top 20% of the income distribution in 2007 dollars was $140,300 in 1979 and $264,700 in 2007. The average pre-tax income for the 20% of the income distribution in 2007 dollars was $16,600 in 1979 and $18,400 in 2007. For all quintiles (not charted) the average pre-tax income in 2007 dollars was $63,400 in 1979 and $96,000 in 2007.
Average Pre-Tax Income for All Households Income Category, 1979-2007 (Inflation Adjusted, 2007 dollars)
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