NCPA - National Center for Policy Analysis

Tax Cuts For All Taxpayers

February 18, 1999

The tax burden is measured in different ways, but by almost every measure, federal taxes are at an unprecedentedly high level. To relieve this increasing burden, many members of Congress are proposing across-the-board cuts in income tax rates, such as Rep. John Kasich's (R-Ohio) 10 percent tax rate cut bill (H.R. 3).

  • According to the U.S. Census Bureau, federal income taxes have risen from 12.1 percent of the average family's income in 1992 to 14.9 percent in 1997.
  • Reducing such taxes to their 1992 level would have given the average family a tax cut of $1,775 in 1997, or 19 percent of its income tax burden.

Under the 10 percent proposal all taxpayers would receive the same percentage reduction in their tax liability. However in 1998 all families with incomes below $20,000 had a negative tax liability -- meaning that not only did they owe no income taxes, but, due mainly to the refundable Earned Income Tax Credit, they received almost $12 billion in tax "refund" checks.

  • By contrast, those with incomes above $100,000 paid $437 billion, or 62.4 percent of all federal income taxes.
  • According to the Congressional Budget Office, those with incomes above $200,000 have seen their share of total income taxes rise from 29.5 percent in 1993 to 37.2 percent in 1997, although they represent just 1.5 percent of all taxpayers.
  • Those with incomes above $1 million increased their share of the total tax burden from 11.3 percent to 16.6 percent over the same period, though they represent a scant 0.1 percent of taxpayers.

Source: Bruce Bartlett, "Why All Taxpayers Deserve a Tax Cut," Brief Analysis No. 284, February 18, 1999, National Center for Policy Analysis, 12770 Coit Rd., Suite 800, Dallas, Texas 75243, (972) 386-6272.


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