Six Decades of U.S. Tax Reform: Why Has the Average Couple's Tax Burden Increased?

Abstract

ABSTRACTWe collect basic federal tax laws over a 64-year period in order to simulate the historical effective tax rates of median income wage-earning couples. We find that effective income tax rates have decreased over the sample period; however, when payroll taxes are included in our calculations, total tax burdens have increased significantly. Interestingly, this increase in middle-class wage taxation has occurred over an historical period in which total federal tax revenue relative to GDP has remained somewhat constant. This implies that the middle class has borne an increasing relative tax burden in recent years. We hope that our analyses inform both the taxpaying public and policy makers of the historical status of middle-class wage earners.