Comprehensive tax brackets

David Henderson has comprehensive federal tax brackets (before whatever it is Congress may pass before 2017 ends) by income, courtesy of the CBO. These include payroll taxes, as well as estimated tax incidence of corporate taxes.


Here’s the description of tax incidence:

CBO allocated individual income taxes and the employee’s share of payroll taxes to the households paying those taxes directly. The agency also allocated the employer’s share of payroll taxes to employees because employers appear to pass on their share of payroll taxes to employees by paying lower wages than they would otherwise pay. Therefore, CBO also added the employer’s share of payroll taxes to households’ earnings when calculating before-tax income.

CBO allocated excise taxes to households according to their consumption of taxed goods and services (such as gasoline, tobacco, and alcohol). Excise taxes on intermediate goods, which are paid by businesses, were attributed to households in proportion to their overall consumption. CBO assumed that each household’s spending on taxed goods and services was the same as that reported in the Bureau of Labor Statistics’ Consumer Expenditure Survey for a household with comparable income and other characteristics.

Far less consensus exists about how to allocate corporate income taxes (and taxes on capital income generally). In this analysis, CBO allocated 75 percent of corporate income taxes to owners of capital in proportion to their income from interest, dividends, rents, and adjusted capital gains; the adjustment smooths out large year-to-year variations in actual realized gains by scaling them to an estimate of their long-term historical level given the size of the economy and the tax rate that applies to them. CBO allocated the remaining 25 percent of corporate income taxes to workers in proportion to their labor income.

I agree with David that 25% is probably too low, unless corporate competition has disappeared.


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