نابرابری درآمد و مالیات بر درآمد

This paper presents summary information on the before- and the after-tax income distribution in the United States between 1984 and 2004, along with data on effective tax rates on households in various quintiles of the income distribution. It describes two effects of tax policy on income distribution. The first involves the redistributive impact of taxes for a given pre-tax distribution of income. The second involves changes in the pre-tax distribution of income that are induced by taxpayers’ behavioral responses to the tax system.

The tax system is the public policy instrument that is most often considered when the objective is to alter the after-tax income distribution. The payroll and income tax systems are the most visible components of the tax structure, but excise taxes and the corporate income tax, which is ultimately borne by households, also affect the after-tax distribution. Many other policies, such as training and education programs, social insurance programs that affect retirement and labor market decisions, and immigration rules, also affect the after-tax income distribution. Their effects come through changes in the pre-tax distribution. The tax system has both a direct effect on the after-tax income distribution and an indirect effect because it may influence the pre-tax income distribution. This short paper summarizes recent trends in before- and after-tax income inequality and explores the impact of the tax system on the after-tax distribution of income. The paper is divided into six parts. The first presents summary information on the pre- and post-tax distribution of income in 2004 and compares these distributions with their counterparts in several earlier years. It emphasizes that changes in the after-tax income distribution between two dates must be decomposed into two components: one due to changes in the pre-tax income distribution, and the other due to changes in the pattern of effective tax rates across income groups. The second section tracks changes in effective tax rates for different income groups over time, and explains how changes in the pre-tax income distribution affect the revenue yield of the federal income tax. The income tax code is progressive, which means that income tax revenues are increasing in the income share of high-income households. The growth in the last decade of the share of income received by high-income households has therefore contributed to rising federal revenues. Section 3 summarizes the changing concentration of federal tax payments across households, and notes the rising share of taxes paid by those at the top of the income distribution. The fourth section examines how the 2001 and 2003 federal income tax reforms affected the after-tax income distribution and the distribution of tax burdens in 2004. It suggests that tax reforms had a much smaller effect on the distribution of after-tax income in 2004, relative to the distribution in 2000, than the changes in the pre-tax income distribution over the same time period. Section 5 discusses the indirect link between the tax code and the after-tax income distribution, focusing in particular on the effect of changes in marginal income tax rates on the aggregate level and distribution of income before-tax. There is a brief conclusion.

The tax system plays a central role in any analysis of income inequality, since it has both direct and indirect effects on the after-tax income distribution. The direct effects stem from tax collections. When the share of income paid as taxes differs at different points in the income distribution, the after-tax income distribution will differ from the pre-tax distribution. The indirect effect arises from changes in taxpayer behavior that are induced by the tax system, and from the resulting changes in the pre-tax income distribution. The indirect effect is likely to accentuate the impact of tax changes on the after-tax distribution of income. A reduction in marginal tax rates on households in one part of the income distribution, if it translates into a reduction in average tax burdens, is likely to raise both the pre-tax and the after-tax share of income accruing to this group. While a growing body of research recognizes that behavioral responses by taxpayers affect the revenue yield of tax reforms, the link between such responses and income distribution has not been explored in detail. Understanding the link between tax policy and income generation is important for understanding the dynamics of the income distribution. Understanding the evolution of the pre-tax income distribution is also essential for making accurate revenue forecasts, particularly for the individual income tax. The progressive structure of the income tax makes revenue projections sensitive to the relative growth rates of household income in different parts of the income distribution. This makes projections of the widening or narrowing of the dispersion of labor earnings and other income components an important component of income tax forecasting. Public finance economists devote substantial attention to analyzing the efficiency cost of various tax instruments, and to identifying strategies for reducing the distortions associated with the current revenue system. As distributional concerns attract growing interest among policy-makers, it may be appropriate to focus more on the complex links between the structure of tax policy and the after-tax income distribution.