Allocating Tax Burdens and Government Benefits by Income Class

Download Government Finance Brief No. 8

Government Finance Brief No. 8

Executive Summary
How much do families at each income level pay, on the average, in taxes, hidden as well as direct? How much benefit do they get from government expenditures? These are questions of perennial interest and significance for public policy decisions.

This study provides some provisional answers to such questions. Because of the limitations of data, the study is confined to broad estimates of (1) the total tax burden—Federal and state-local—on families and unattached individuals by income class and by major type of tax, and (3) the benefits of government expenditures by major groups of programs.

Estimates of the distribution of the tax burden and expenditure benefits require assumptions about the incidence of taxation and the distribution of benefits. An element of judgment also appears in selecting appropriate definitions of income, taxes, and benefits.

The methods used in this study are similar to those used in earlier studies by Tax Foundation and others. A brief discussion of methods and assumptions is given below following the summary of major findings.