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Choosing the Nation’s Fiscal Future
and very few tax expenditures. This analysis, too, is summarized in Table 8-1 and the discussion that follows it. Over time and for the four scenarios, the rates, bracket thresholds, and standard deduction are adjusted to the revenue needs.
Table E-1 details the implementation of the current tax structure under the four scenarios and for selected years from 2012 through 2080. Because the low revenue scenario retains the rates and other features of the personal income tax under current law, the rates shown in Table E-1(A) are constant over time. Table E-2 similarly details the implementation of the simplified tax structure.
Tables E-3 through E-18 project the distributional implications of the revenue options for the federal tax system as a whole, by income quintiles and for the top 10 and 5 percent groups of the income distribution. Tables E-3 through E-10 pertain to the current tax structure for selected years; Tables E-11 through E-18 are for the simplified tax structure for the same years.
These tables show average combined federal tax rates, each group’s percentage share of the combined federal tax burden, and percentage changes in after-tax income (again for federal taxes combined) compared to current-law taxation for that year. The combination of federal taxes includes the personal income tax (net of refundable credits); the corporate income tax allocated to individuals; the payroll taxes for Medicare and Social Security levied on both workers (and—as allocated to individuals—on employers); the estate tax similarly allocated; and an allocation of any VAT (Burman et al., 2008c; Rohaly et al., 2005). The average tax rate for the population or any subgroup is the average combined federal tax as a percentage of its average income. Comparing across groups, average tax rates are also indicators of the distribution of the combined tax burden.