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Choosing the Nation's Fiscal Future (2010)

Chapter: Appendix E: Revenue Options and Their Implications

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Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
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Appendix E
Revenue Options and Their Implications

This appendix supplements Chapter 8 on revenue options. The Tax Policy Center (TPC) of the Urban Institute and Brookings Institution used specified assumptions provided by the study committee to model both the illustrative current tax and simplified tax structures over a nearly 75-year period. TPC estimated microdynamic taxpayer responses to specific tax changes. In addition, and also under the guidance of the study committee, TPC developed and applied appropriate policy specifications and behavioral assumptions to estimate microdynamic responses to the change in the corporate income tax under the simplified tax structure to estimate the effects of changes in the corporation income tax. Because TPC’s is a micro-simulation model, it took gross domestic product (GDP) as fixed; that is, TPC did not attempt to estimate the macroeconomic effects of tax changes, such as effects on investment and incomes. The results of these simulations are presented below. (For additional details on the analytic methods, see note 26 in Chapter 8.)

We use “current tax structure” as a shorthand for the current overall personal income tax regime of six brackets, an Alternative Minimum Tax (AMT), and many tax expenditures. Over time, and for the three scenarios with higher levels of revenues and spending than the “low” one, the various statutory tax rates and bracket thresholds are adjusted to raise the revenue needed. Because of the deemed maximum rates, the “high” current tax structure scenario must add a value-added tax (VAT). This analysis is summarized in Table 8-1 in Chapter 8 and the discussion that follows it; details are presented in the tables below.

By contrast, we use “simplified tax structure” to mean two tax brackets

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

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.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-1 Statutory Tax Rates Under the Current Tax Structure, as Percentages

Rate

2012

2020

2030

2040

2050

2060

2070

2080

(A) Low Spending and Revenues Scenario

Personal Income Taxa

Regular Tax

10

10.0

10.0

10.0

10.0

10.0

10.0

10.0

10.0

15

15.0

15.0

15.0

15.0

15.0

15.0

15.0

15.0

25

25.0

25.0

25.0

25.0

25.0

25.0

25.0

25.0

28

28.0

28.0

28.0

28.0

28.0

28.0

28.0

28.0

33

33.0

33.0

33.0

33.0

33.0

33.0

33.0

33.0

35

35.0

35.0

35.0

35.0

35.0

35.0

35.0

35.0

Capital Gains and Qualified Dividends

15

15.0

15.0

15.0

15.0

15.0

15.0

15.0

15.0

Alternative Minimum Tax

26

26.0

26.0

26.0

26.0

26.0

26.0

26.0

26.0

28

28.0

28.0

28.0

28.0

28.0

28.0

28.0

28.0

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

(B) Intermediate-1 Spending and Revenues Scenario

Personal Income Taxa

Regular Tax

10

11.6

12.7

12.4

11.6

10.6

10.3

10.5

10.4

15

17.4

19.1

18.6

17.4

15.9

15.4

15.7

15.7

25

29.1

31.8

31.0

29.0

26.5

25.7

26.1

26.1

28

32.5

35.6

34.7

32.5

29.7

28.8

29.3

29.2

33

38.4

42.0

40.9

38.3

35.0

34.0

34.5

34.5

35

40.7

44.5

43.4

40.6

37.2

36.0

36.6

36.6

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

Rate

2012

2020

2030

2040

2050

2060

2070

2080

Capital Gains and Qualified Dividends

15

17.4

19.1

18.6

17.4

15.9

15.4

15.7

15.7

Alternative Minimum Tax

26

30.2

33.1

32.2

30.1

27.6

26.8

27.2

27.2

28

32.5

35.6

34.7

32.5

29.7

28.8

29.3

29.2

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

(C) Intermediate-2 Spending and Revenues Scenario

Personal Income Taxa

Regular Tax

10

10.9

11.4

11.7

11.9

11.7

11.8

12.1

12.2

15

16.4

17.1

17.6

17.9

17.5

17.7

18.2

18.2

25

27.3

28.5

29.4

29.8

29.2

29.4

30.3

30.4

28

30.5

31.9

32.9

33.3

32.8

33.0

33.9

34.0

33

36.0

37.7

38.8

39.3

38.6

38.8

40.0

40.1

35

38.2

39.9

41.1

41.7

40.9

41.2

42.4

42.5

Capital Gains and Qualified Dividends

15

16.4

17.1

17.6

17.9

17.5

17.7

18.2

18.2

Alternative Minimum Tax

26

28.3

29.7

30.5

31.0

30.4

30.6

31.5

31.6

28

30.5

31.9

32.9

33.3

32.8

33.0

33.9

34.0

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

(D) High Spending and Revenues Scenario

Personal Income Taxa

Regular Tax

10

12.2

14.3

14.3

14.3

14.3

14.3

14.3

14.3

15

18.3

21.4

21.4

21.4

21.4

21.4

21.4

21.4

25

30.5

35.7

35.7

35.7

35.7

35.7

35.7

35.7

28

34.2

40.0

40.0

40.0

40.0

40.0

40.0

40.0

33

40.3

47.1

47.1

47.1

47.1

47.1

47.1

47.1

35

42.8

50.0

50.0

50.0

50.0

50.0

50.0

50.0

Capital Gains and Qualified Dividends

15

18.3

21.4

21.4

21.4

21.4

21.4

21.4

21.4

Alternative Minimum Tax

26

31.8

37.1

37.1

37.1

37.1

37.1

37.1

37.1

28

34.2

40.0

40.0

40.0

40.0

40.0

40.0

40.0

VAT (if added; there is no current U.S. VAT)

 

NA

0.9

5.2

7.7

8.1

9.7

12.9

14.6

NOTE: NA = not applicable.

aCurrent law is in left-most column.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-2 Statutory Tax Rates and Other Features Under the Simplified Tax Structure

 

2012

2020

2030

2040

2050

2060

2070

2080

(A) Low Spending and Revenues Scenario

Simplified Personal Income Tax

Regular Tax Rates (Percentages)

Lower Bracket

10.0

9.4

8.8

8.4

8.1

7.9

7.7

7.5

Upper Bracket

25.0

23.4

22.0

20.9

20.2

19.8

19.2

18.8

Bracket Thresholds (Current Dollars)

Lower Bracket

36,550

41,300

51,050

63,450

78,900

98,075

121,925

151,550

Upper Bracket

73,100

82,600

102,100

126,900

157,800

196,150

243,850

303,100

Standard Deduction (Current Dollars)

 

8,500

9,600

11,900

14,800

18,400

22,850

28,450

35,350

 

17,000

19,200

23,800

29,600

36,800

45,700

56,900

70,700

Capital Gains and Qualified Dividend Tax Rate (Percentages)

 

15.0

14.0

13.2

12.6

12.1

11.9

11.5

11.3

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

(B) Intermediate-1 Spending and Revenues Scenario

Simplified Personal Income Tax

Regular Tax Rates (Percentages)

Lower Bracket

10.0

10.3

9.6

8.7

7.8

7.5

7.5

7.4

Upper Bracket

25.0

25.9

23.9

21.7

19.5

18.8

18.6

18.4

Bracket Thresholds (Current Dollars)

Lower Bracket

25,625

28,950

35,775

44,475

55,300

68,750

85,450

106,225

Upper Bracket

51,250

57,900

71,550

88,950

110,600

137,500

170,900

212,450

Standard Deduction (Current Dollars)

 

5,950

6,750

8,350

10,350

12,900

16,000

19,900

24,750

 

11,900

13,500

16,700

20,700

25,800

32,000

39,800

49,500

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

Capital Gains and Qualified Dividend Tax Rate (Percentages)

 

15.0

15.5

14.3

13.0

11.7

11.3

11.2

11.0

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

(C) Intermediate-2 Spending and Revenues Scenario

Simplified Personal Income Tax

Regular Tax Rates (Percentages)

Lower Bracket

10.0

9.9

9.5

9.3

8.9

8.8

8.8

8.7

Upper Bracket

25.0

24.6

23.9

23.2

22.2

22.0

22.0

21.8

Bracket Thresholds (Current Dollars)

Lower Bracket

29,950

33,850

41,825

52,000

64,625

80,350

99,900

124,175

Upper Bracket

59,900

67,700

83,650

104,000

129,250

160,700

199,800

248,350

Standard Deduction (Current Dollars)

 

6,950

7,900

9,750

12,100

15,050

18,750

23,300

28,950

 

13,900

15,800

19,500

24,200

30,100

37,500

46,600

57,900

Capital Gains and Qualified Dividend Tax Rate (Percentages)

 

15.0

14.8

14.3

13.9

13.3

13.2

13.2

13.1

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

(D) High Spending and Revenues Scenario

Simplified Personal Income Tax

Regular Tax Rates (Percentages)

Lower Bracket

10.0

11.1

10.5

10.2

10.2

10.3

9.7

11.5

Upper Bracket

25.0

27.7

26.3

25.6

25.1

25.7

24.4

28.7

Bracket Thresholds (Current Dollars)

Lower Bracket

22,475

25,400

31,400

39,025

48,525

60,325

75,000

93,225

Upper Bracket

44,950

50,800

62,800

78,050

97,050

120,650

150,000

186,450

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

Standard Deduction (Current Dollars)

 

5,200

5,900

7,300

9,100

11,300

14,050

17,500

21,750

 

10,500

11,850

14,650

18,200

22,650

28,150

35,000

43,500

Capital Gains & Qualified Dividend Tax Rate (Percentages)

 

15.0

16.6

15.8

15.4

15.0

15.4

14.6

17.2

VAT (if added; there is no current U.S. VAT)

 

NA

NA

NA

NA

NA

NA

NA

NA

NOTE: NA = not applicable.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-3 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2012

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

4.6

0.8

NA

Second Quintile

10.3

4.2

NA

Third Quintile

16.3

10.9

NA

Fourth Quintile

19.1

18.3

NA

Fifth Quintile

25.0

65.7

NA

All

20.7

100.0

NA

Top 10 Percent

26.1

51.6

NA

Top 5 Percent

27.0

41.2

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

5.1

0.8

−0.5

Second Quintile

11.2

4.1

−1.1

Third Quintile

17.8

10.8

−1.8

Fourth Quintile

21.0

18.2

−2.3

Fifth Quintile

27.8

66.0

−3.7

All

22.9

100.0

−2.8

Top 10 Percent

29.0

51.9

−4.0

Top 5 Percent

30.1

41.5

−4.2

Intermediate-2 Spending and Revenues Scenario

First Quintile

5.1

0.9

−0.5

Second Quintile

11.0

4.2

−0.8

Third Quintile

17.3

10.9

−1.3

Fourth Quintile

20.4

18.2

−1.6

Fifth Quintile

26.7

65.7

−2.3

All

22.1

100.0

−1.8

Top 10 Percent

27.9

51.6

−2.4

Top 5 Percent

28.9

41.2

−2.5

High Spending and Revenues Scenario

First Quintile

5.2

0.8

−0.6

Second Quintile

11.4

4.1

−1.3

Third Quintile

18.1

10.7

−2.2

Fourth Quintile

21.6

18.1

−3.0

Fifth Quintile

28.7

66.2

−4.9

All

23.6

100.0

−3.6

Top 10 Percent

30.0

52.1

−5.3

Top 5 Percent

31.2

41.7

−5.7

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-4 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2020

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

4.9

0.9

NA

Second Quintile

9.9

4.0

NA

Third Quintile

16.6

10.8

NA

Fourth Quintile

19.9

19.2

NA

Fifth Quintile

24.7

65.1

NA

All

20.8

100.0

NA

Top 10 Percent

25.5

50.0

NA

Top 5 Percent

26.1

38.8

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

6.2

0.9

−1.4

Second Quintile

12.0

4.0

−2.3

Third Quintile

19.9

10.7

−4.0

Fourth Quintile

24.0

19.1

−5.1

Fifth Quintile

30.1

65.3

−7.1

All

25.3

100.0

−5.6

Top 10 Percent

31.1

50.2

−7.5

Top 5 Percent

31.8

39.0

−7.7

Intermediate-2 Spending and Revenues Scenario

First Quintile

6.1

0.9

−1.3

Second Quintile

11.6

4.0

−1.8

Third Quintile

19.0

10.8

−2.9

Fourth Quintile

22.7

19.1

−3.5

Fifth Quintile

28.3

65.0

−4.7

All

23.8

100.0

−3.8

Top 10 Percent

29.2

50.0

−4.9

Top 5 Percent

29.8

38.8

−5.1

High Spending and Revenues Scenario

First Quintile

6.6

0.9

−1.8

Second Quintile

12.8

3.9

−3.2

Third Quintile

21.3

10.4

−5.6

Fourth Quintile

25.9

18.8

−7.4

Fifth Quintile

33.3

66.0

−11.4

All

27.6

100.0

−8.6

Top 10 Percent

34.6

66.0

−12.2

Top 5 Percent

35.4

39.7

−12.6

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-5 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2030

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

5.4

1.0

NA

Second Quintile

10.5

4.1

NA

Third Quintile

17.3

10.8

NA

Fourth Quintile

20.8

19.6

NA

Fifth Quintile

25.5

64.5

NA

All

21.5

100.0

NA

Top 10 Percent

26.4

49.7

NA

Top 5 Percent

27.0

38.5

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

7.2

1.0

−1.9

Second Quintile

13.1

4.2

−2.9

Third Quintile

21.3

10.9

−4.8

Fourth Quintile

25.5

19.6

−5.9

Fifth Quintile

31.1

64.2

−7.5

All

26.3

100.0

−6.1

Top 10 Percent

32.1

49.4

−7.8

Top 5 Percent

32.7

38.2

−7.9

Intermediate-2 Spending and Revenues Scenario

First Quintile

7.3

1.1

−2.0

Second Quintile

13.0

4.2

−2.8

Third Quintile

21.0

10.9

−4.4

Fourth Quintile

25.0

19.6

−5.3

Fifth Quintile

30.4

64.1

−6.5

All

25.8

100.0

−5.4

Top 10 Percent

27.7

49.3

−6.7

Top 5 Percent

28.3

38.1

−6.8

High Spending and Revenues Scenario

First Quintile

8.7

1.1

−3.5

Second Quintile

15.0

4.2

−5.1

Third Quintile

24.2

10.7

−8.3

Fourth Quintile

29.0

19.3

−10.3

Fifth Quintile

36.1

64.6

−14.1

All

30.3

100.0

−11.2

Top 10 Percent

37.4

64.6

−14.9

Top 5 Percent

38.2

38.7

−15.3

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-6 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2040

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

6.0

1.0

NA

Second Quintile

11.2

4.2

NA

Third Quintile

17.8

10.5

NA

Fourth Quintile

21.8

19.5

NA

Fifth Quintile

25.2

64.7

NA

All

21.8

100.0

NA

Top 10 Percent

25.8

50.3

NA

Top 5 Percent

26.1

39.0

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

7.9

1.2

−2.0

Second Quintile

13.7

4.3

−2.8

Third Quintile

21.4

10.7

−4.4

Fourth Quintile

26.1

19.7

−5.5

Fifth Quintile

29.5

64.1

−5.8

All

25.8

100.0

−5.1

Top 10 Percent

30.1

49.5

−5.7

Top 5 Percent

30.3

38.3

−5.6

Intermediate-2 Spending and Revenues Scenario

First Quintile

8.0

1.1

−2.2

Second Quintile

13.9

4.3

−3.1

Third Quintile

21.8

10.6

−4.8

Fourth Quintile

26.5

19.6

−6.1

Fifth Quintile

30.4

64.3

−6.8

All

26.4

100.0

−5.9

Top 10 Percent

31.0

49.8

−6.9

Top 5 Percent

31.2

38.6

−6.9

High Spending and Revenues Scenario

First Quintile

10.0

1.2

−4.3

Second Quintile

16.5

4.3

−6.0

Third Quintile

25.7

10.5

−9.5

Fourth Quintile

31.3

19.3

−12.1

Fifth Quintile

36.5

64.7

−15.0

All

31.5

100.0

−12.4

Top 10 Percent

37.4

50.3

−15.5

Top 5 Percent

37.7

39.0

−15.7

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-7 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2050

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

7.0

1.2

NA

Second Quintile

11.8

4.2

NA

Third Quintile

18.2

10.5

NA

Fourth Quintile

22.3

19.3

NA

Fifth Quintile

25.0

64.8

NA

All

22.0

100.0

NA

Top 10 Percent

25.4

50.8

NA

Top 5 Percent

25.3

39.3

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

9.0

1.3

−2.2

Second Quintile

14.1

4.4

−2.6

Third Quintile

21.1

10.8

−3.5

Fourth Quintile

25.6

19.7

−4.2

Fifth Quintile

27.6

63.7

−3.5

All

24.8

100.0

−3.5

Top 10 Percent

27.8

49.5

−3.2

Top 5 Percent

27.5

38.1

−3.0

Intermediate-2 Spending and Revenues Scenario

First Quintile

9.1

1.3

−2.3

Second Quintile

14.5

4.3

−3.1

Third Quintile

22.0

10.6

−4.6

Fourth Quintile

26.9

19.5

−5.9

Fifth Quintile

29.7

64.3

−6.2

All

26.3

100.0

−5.5

Top 10 Percent

30.0

50.3

−6.2

Top 5 Percent

29.8

38.8

−6.0

High Spending and Revenues Scenario

First Quintile

11.5

1.3

−4.8

Second Quintile

17.4

4.2

−6.3

Third Quintile

26.3

10.4

−9.8

Fourth Quintile

32.1

19.2

−12.6

Fifth Quintile

36.2

64.8

−15.0

All

31.9

100.0

−12.7

Top 10 Percent

36.5

64.8

−16.0

Top 5 Percent

37.9

39.4

−16.2

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-8 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2060

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

7.4

1.1

NA

Second Quintile

12.8

4.3

NA

Third Quintile

19.5

11.3

NA

Fourth Quintile

23.0

19.7

NA

Fifth Quintile

25.2

63.5

NA

All

22.5

100.0

NA

Top 10 Percent

25.4

49.9

NA

Top 5 Percent

26.0

38.7

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

9.3

1.3

−2.0

Second Quintile

15.0

4.5

−2.5

Third Quintile

22.1

11.7

−3.3

Fourth Quintile

25.8

20.1

−3.7

Fifth Quintile

27.2

62.3

−2.6

All

24.8

100.0

−2.9

Top 10 Percent

27.8

48.5

−3.2

Top 5 Percent

28.2

37.3

−3.0

Intermediate-2 Spending and Revenues Scenario

First Quintile

9.6

1.2

−2.4

Second Quintile

15.8

4.4

−3.4

Third Quintile

23.7

11.5

−5.2

Fourth Quintile

27.9

19.8

−6.4

Fifth Quintile

30.1

63.1

−6.6

All

27.1

100.0

−8.6

Top 10 Percent

30.6

49.4

−7.0

Top 5 Percent

31.3

38.2

−7.2

High Spending and Revenues Scenario

First Quintile

12.5

1.3

−5.6

Second Quintile

19.3

4.4

−7.5

Third Quintile

28.7

11.3

−11.5

Fourth Quintile

33.8

19.6

−14.1

Fifth Quintile

37.0

63.3

−15.8

All

33.2

100.0

−13.8

Top 10 Percent

37.8

63.3

−16.8

Top 5 Percent

39.0

38.5

−16.7

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-9 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2070

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

6.9

1.1

NA

Second Quintile

13.6

4.3

NA

Third Quintile

20.1

11.7

NA

Fourth Quintile

23.0

19.9

NA

Fifth Quintile

25.2

63.0

NA

All

22.7

100.0

NA

Top 10 Percent

25.4

49.5

NA

Top 5 Percent

25.1

38.0

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

8.6

1.2

−1.8

Second Quintile

16.0

4.6

−2.7

Third Quintile

23.0

12.0

−3.6

Fourth Quintile

26.0

20.3

−3.9

Fifth Quintile

27.5

61.9

−3.0

All

25.2

100.0

−3.2

Top 10 Percent

27.5

48.2

−2.8

Top 5 Percent

27.0

36.8

−2.5

Intermediate-2 Spending and Revenues Scenario

First Quintile

9.1

1.1

−2.4

Second Quintile

17.2

4.4

−4.1

Third Quintile

25.1

11.8

−6.3

Fourth Quintile

28.6

20.1

−7.3

Fifth Quintile

30.8

62.5

−7.5

All

28.0

100.0

−6.8

Top 10 Percent

31.0

48.9

−7.5

Top 5 Percent

30.5

37.5

−7.2

High Spending and Revenues Scenario

First Quintile

12.5

1.3

−6.0

Second Quintile

21.2

4.5

−8.9

Third Quintile

30.5

11.7

−13.0

Fourth Quintile

34.6

19.8

−15.0

Fifth Quintile

37.8

62.6

−16.8

All

34.2

100.0

−14.9

Top 10 Percent

35.2

49.2

−17.0

Top 5 Percent

37.7

37.8

−16.7

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-10 Current Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2080

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario, Which Is Current Law

First Quintile

6.8

0.9

NA

Second Quintile

13.7

4.0

NA

Third Quintile

20.7

11.8

NA

Fourth Quintile

23.3

20.1

NA

Fifth Quintile

25.4

63.2

NA

All

23.1

100.0

NA

Top 10 Percent

25.6

49.7

NA

Top 5 Percent

25.1

38.5

NA

Intermediate-1 Spending and Revenues Scenario

First Quintile

8.5

1.0

−1.8

Second Quintile

16.2

4.3

−2.9

Third Quintile

23.8

12.1

−3.9

Fourth Quintile

26.4

20.5

−4.1

Fifth Quintile

27.7

62.0

−3.1

All

25.6

100.0

−3.4

Top 10 Percent

27.7

48.4

−2.9

Top 5 Percent

27.0

37.2

−2.5

Intermediate-2 Spending and Revenues Scenario

First Quintile

9.0

1.0

−2.3

Second Quintile

17.3

4.1

−4.3

Third Quintile

26.0

11.9

−6.7

Fourth Quintile

29.1

20.3

−7.6

Fifth Quintile

31.2

62.6

−7.8

All

28.5

100.0

−7.1

Top 10 Percent

31.3

49.1

−7.7

Top 5 Percent

30.6

37.9

−7.3

High Spending and Revenues Scenario

First Quintile

13.3

1.2

−7.0

Second Quintile

22.2

4.2

−9.9

Third Quintile

32.1

11.8

−14.4

Fourth Quintile

35.9

20.1

−16.4

Fifth Quintile

38.8

62.6

−18.0

All

35.6

100.0

−16.3

Top 10 Percent

39.1

49.2

−18.1

Top 5 Percent

38.3

38.1

−17.6

NOTE: NA = not applicable.

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-11 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2012

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

4.5

0.8

0.1

Second Quintile

10.2

4.2

0.1

Third Quintile

15.7

10.6

0.7

Fourth Quintile

18.6

17.9

0.7

Fifth Quintile

25.1

66.4

−0.1

All

20.6

100.0

0.2

Top 10 Percent

26.2

52.2

−0.2

Top 5 Percent

26.9

41.2

0.2

Intermediate-1 Spending and Revenues Scenario

First Quintile

5.2

0.9

−0.6

Second Quintile

11.1

4.2

−0.9

Third Quintile

17.8

11.1

−1.8

Fourth Quintile

20.9

18.7

−2.2

Fifth Quintile

26.5

65.1

−2.1

All

22.2

100.0

−1.9

Top 10 Percent

27.2

50.2

−1.4

Top 5 Percent

27.5

39.1

−0.6

Intermediate-2 Spending and Revenues Scenario

First Quintile

4.9

0.9

−0.3

Second Quintile

10.7

4.2

−0.5

Third Quintile

16.8

10.8

−0.6

Fourth Quintile

19.8

18.2

−0.8

Fifth Quintile

26.0

65.8

−1.3

All

21.5

100.0

−1.0

Top 10 Percent

26.8

51.1

−0.9

Top 5 Percent

27.3

40.0

−0.3

High Spending and Revenues Scenario

First Quintile

5.4

0.9

−0.8

Second Quintile

11.5

4.2

−1.3

Third Quintile

18.6

11.3

−2.8

Fourth Quintile

21.9

19.0

−3.5

Fifth Quintile

27.0

64.4

−2.6

All

22.8

100.0

−2.6

Top 10 Percent

27.5

49.4

−1.8

Top 5 Percent

27.7

38.3

−0.8

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-12 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2020

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

5.2

0.9

−0.3

Second Quintile

10.7

4.3

−0.8

Third Quintile

16.3

10.7

0.4

Fourth Quintile

19.6

19.1

0.4

Fifth Quintile

24.3

64.8

0.5

All

20.6

100.0

0.3

Top 10 Percent

24.9

49.4

0.8

Top 5 Percent

25.1

37.8

1.3

Intermediate-1 Spending and Revenues Scenario

First Quintile

7.2

1.1

−2.4

Second Quintile

13.3

4.4

−3.7

Third Quintile

20.9

11.4

−5.1

Fourth Quintile

24.9

20.2

−6.2

Fifth Quintile

28.4

62.8

−4.8

All

24.7

100.0

−4.9

Top 10 Percent

28.5

47.0

−4.0

Top 5 Percent

28.4

35.5

−3.1

Intermediate-2 Spending and Revenues Scenario

First Quintile

6.7

1.0

−1.9

Second Quintile

12.5

4.4

−2.9

Third Quintile

19.4

11.1

−3.3

Fourth Quintile

23.0

19.7

−3.8

Fifth Quintile

27.2

63.6

−3.3

All

23.5

100.0

−3.3

Top 10 Percent

27.6

48.0

−2.7

Top 5 Percent

27.6

36.4

−2.0

High Spending and Revenues Scenario

First Quintile

7.6

1.0

−2.8

Second Quintile

14.3

4.4

−4.8

Third Quintile

22.5

11.4

−7.1

Fourth Quintile

26.9

20.3

−8.7

Fifth Quintile

30.6

62.8

−7.8

All

26.7

100.0

−7.4

Top 10 Percent

30.8

47.0

−7.0

Top 5 Percent

30.6

35.5

−6.1

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-13 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2030.

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

6.2

1.1

−0.9

Second Quintile

11.5

4.6

−1.2

Third Quintile

17.4

11.0

−0.1

Fourth Quintile

20.8

19.9

0.0

Fifth Quintile

24.7

63.4

1.1

All

21.2

100.0

0.4

Top 10 Percent

25.1

48.1

1.7

Top 5 Percent

25.3

36.7

2.3

Intermediate-1 Spending and Revenues Scenario

First Quintile

8.8

1.3

−3.7

Second Quintile

15.1

4.9

−5.1

Third Quintile

22.6

11.8

−6.4

Fourth Quintile

26.6

20.9

−7.3

Fifth Quintile

28.8

60.9

−4.4

All

25.7

100.0

−5.3

Top 10 Percent

28.8

45.4

−3.3

Top 5 Percent

28.6

34.2

−2.2

Intermediate-2 Spending and Revenues Scenario

First Quintile

9.0

1.4

−3.9

Second Quintile

15.1

5.0

−5.1

Third Quintile

22.0

11.7

−5.7

Fourth Quintile

25.6

20.5

−6.1

Fifth Quintile

28.6

61.4

−4.1

All

25.3

100.0

−4.8

Top 10 Percent

28.7

46.1

−3.2

Top 5 Percent

28.7

34.9

−2.3

High Spending and Revenues Scenario

First Quintile

9.8

1.3

−4.7

Second Quintile

17.0

5.1

−7.3

Third Quintile

24.9

11.9

−9.1

Fourth Quintile

28.8

20.8

−10.1

Fifth Quintile

31.4

60.9

−7.9

All

28.1

100.0

−8.4

Top 10 Percent

31.6

45.6

−7.0

Top 5 Percent

31.4

34.4

−6.0

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-14 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2040

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

7.6

1.3

−1.7

Second Quintile

12.6

4.8

−1.6

Third Quintile

18.3

11.0

−0.6

Fourth Quintile

22.1

20.1

−0.4

Fifth Quintile

24.0

62.7

1.7

All

21.4

100.0

0.5

Top 10 Percent

24.1

47.8

2.4

Top 5 Percent

24.0

36.5

2.8

Intermediate-1 Spending and Revenues Scenario

First Quintile

10.2

1.5

−4.5

Second Quintile

16.4

5.3

−6.0

Third Quintile

23.3

11.9

−6.6

Fourth Quintile

27.3

21.1

−7.0

Fifth Quintile

27.1

60.1

−2.4

All

25.2

100.0

−4.3

Top 10 Percent

26.6

45.0

−1.1

Top 5 Percent

26.2

33.9

−0.1

Intermediate-2 Spending and Revenues Scenario

First Quintile

10.1

1.5

−4.4

Second Quintile

16.0

5.1

−5.5

Third Quintile

23.0

11.5

−6.3

Fourth Quintile

27.4

20.7

−7.1

Fifth Quintile

28.2

61.2

−3.9

All

25.8

100.0

−5.1

Top 10 Percent

28.0

46.1

−2.9

Top 5 Percent

27.7

35.0

−2.1

High Spending and Revenues Scenario

First Quintile

11.3

1.5

−5.7

Second Quintile

18.9

5.3

−8.7

Third Quintile

26.5

11.8

−10.6

Fourth Quintile

30.9

20.8

−11.7

Fifth Quintile

31.4

60.6

−8.3

All

29.0

100.0

−9.2

Top 10 Percent

31.2

45.7

−7.2

Top 5 Percent

30.8

34.7

−6.4

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-15 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2050

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

8.8

1.5

−2.0

Second Quintile

13.6

4.9

−2.0

Third Quintile

19.1

11.2

−1.0

Fourth Quintile

23.0

20.3

−0.8

Fifth Quintile

23.4

62.1

2.1

All

21.6

100.0

0.6

Top 10 Percent

23.3

47.6

2.8

Top 5 Percent

23.0

36.5

3.1

Intermediate-1 Spending and Revenues Scenario

First Quintile

11.5

1.7

−4.8

Second Quintile

17.4

5.6

−6.3

Third Quintile

23.3

12.2

−6.2

Fourth Quintile

26.9

21.2

−5.9

Fifth Quintile

25.1

59.2

−0.1

All

24.2

100.0

−2.8

Top 10 Percent

24.5

44.6

1.2

Top 5 Percent

23.8

33.7

2.0

Intermediate-2 Spending and Revenues Scenario

First Quintile

11.5

1.6

−4.9

Second Quintile

17.3

5.2

−6.2

Third Quintile

23.7

11.7

−6.7

Fourth Quintile

28.0

20.8

−7.2

Fifth Quintile

27.2

60.5

−2.9

All

25.6

100.0

−4.6

Top 10 Percent

26.8

46.0

−1.8

Top 5 Percent

26.2

35.1

−1.2

High Spending and Revenues Scenario

First Quintile

12.7

1.6

−6.2

Second Quintile

20.3

5.5

−9.6

Third Quintile

27.2

11.9

−11.0

Fourth Quintile

31.3

20.6

−11.6

Fifth Quintile

30.6

60.4

−7.5

All

28.9

100.0

−8.9

Top 10 Percent

30.3

46.1

−6.5

Top 5 Percent

29.8

35.2

−6.0

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-16 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2060

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

9.6

1.5

−2.4

Second Quintile

14.7

5.0

−2.2

Third Quintile

20.5

12.2

−1.3

Fourth Quintile

23.7

20.7

−0.9

Fifth Quintile

23.4

60.5

2.4

All

22.0

100.0

0.7

Top 10 Percent

23.2

46.5

3.1

Top 5 Percent

22.8

35.7

3.3

Intermediate-1 Spending and Revenues Scenario

First Quintile

12.1

1.7

−5.1

Second Quintile

18.4

5.7

−6.4

Third Quintile

24.3

13.2

−6.0

Fourth Quintile

27.0

21.5

−5.3

Fifth Quintile

24.6

57.8

0.8

All

24.2

100.0

−2.1

Top 10 Percent

23.9

43.6

2.1

Top 5 Percent

23.1

33.0

2.8

Intermediate-2 Spending and Revenues Scenario

First Quintile

12.4

1.6

−5.4

Second Quintile

18.7

5.3

−6.8

Third Quintile

25.5

12.6

−7.5

Fourth Quintile

28.9

20.9

−7.7

Fifth Quintile

27.9

59.6

−3.7

All

26.6

100.0

−5.3

Top 10 Percent

27.5

45.7

−2.8

Top 5 Percent

27.0

35.0

−2.3

High Spending and Revenues Scenario

First Quintile

14.3

1.6

−7.5

Second Quintile

22.5

5.5

−11.1

Third Quintile

29.8

12.8

−12.8

Fourth Quintile

33.1

20.9

−13.1

Fifth Quintile

31.7

59.0

−8.6

All

30.5

100.0

−10.2

Top 10 Percent

31.2

45.2

−7.6

Top 5 Percent

30.5

34.7

−7.1

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-17 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2070

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

9.3

1.5

−2.6

Second Quintile

15.5

5.1

−2.2

Third Quintile

21.4

12.7

−1.6

Fourth Quintile

23.7

21.1

−0.9

Fifth Quintile

23.3

59.6

2.6

All

22.1

100.0

0.8

Top 10 Percent

22.9

45.7

3.4

Top 5 Percent

22.4

34.9

3.5

Intermediate-1 Spending and Revenues Scenario

First Quintile

11.8

1.7

−5.3

Second Quintile

19.4

5.7

−6.7

Third Quintile

25.4

13.6

−6.6

Fourth Quintile

27.1

21.7

−5.3

Fifth Quintile

24.8

57.3

0.6

All

24.5

100.0

−2.4

Top 10 Percent

24.0

43.2

1.9

Top 5 Percent

23.3

32.6

2.5

Intermediate-2 Spending and Revenues Scenario

First Quintile

12.4

1.6

−5.9

Second Quintile

20.3

5.4

−7.7

Third Quintile

27.2

13.2

−8.9

Fourth Quintile

29.5

21.4

−8.5

Fifth Quintile

27.9

58.3

−3.6

All

27.1

100.0

−5.7

Top 10 Percent

27.3

44.4

−2.5

Top 5 Percent

26.6

33.7

−2.0

High Spending and Revenues Scenario

First Quintile

13.9

1.6

−7.5

Second Quintile

23.1

5.6

−11.0

Third Quintile

30.2

13.3

−12.7

Fourth Quintile

32.3

21.2

−12.1

Fifth Quintile

30.8

58.3

−7.5

All

29.9

100.0

−9.4

Top 10 Percent

30.3

44.6

−6.5

Top 5 Percent

29.7

34.0

−6.1

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×

TABLE E-18 Simplified Tax Structure: Average Tax Rates and Tax Distribution for Virtually All Federal Taxes Combined, 2080

 

Average Tax Rate (percentage)

Percentage Share of Tax Burden

Percentage Change in After-Tax Incomea

Low Spending and Revenues Scenario

First Quintile

9.2

1.3

−2.6

Second Quintile

15.7

4.7

−2.3

Third Quintile

22.0

12.9

−1.7

Fourth Quintile

24.0

21.3

−1.0

Fifth Quintile

23.4

59.8

2.7

All

22.4

100.0

0.8

Top 10 Percent

23.0

45.8

3.5

Top 5 Percent

22.4

35.3

3.6

Intermediate-1 Spending and Revenues Scenario

First Quintile

11.8

1.5

−5.4

Second Quintile

19.6

5.3

−6.9

Third Quintile

26.0

13.7

−6.7

Fourth Quintile

27.5

21.9

−5.4

Fifth Quintile

25.0

57.5

0.5

All

24.9

100.0

−2.4

Top 10 Percent

24.2

43.5

1.9

Top 5 Percent

23.2

33.0

2.5

Intermediate-2 Spending and Revenues Scenario

First Quintile

12.3

1.4

−5.9

Second Quintile

20.6

5.0

−8.0

Third Quintile

28.0

13.3

−9.3

Fourth Quintile

30.0

21.6

−8.8

Fifth Quintile

28.2

58.6

−3.8

All

27.6

100.0

−5.9

Top 10 Percent

27.5

44.6

−2.6

Top 5 Percent

26.6

34.1

−2.0

High Spending and Revenues Scenario

First Quintile

15.4

1.4

−9.2

Second Quintile

26.2

5.1

−14.5

Third Quintile

35.0

13.3

−18.1

Fourth Quintile

37.2

21.4

−18.1

Fifth Quintile

35.4

58.8

−13.5

All

34.6

100.0

−15.0

Top 10 Percent

34.8

45.1

−12.3

Top 5 Percent

33.9

34.7

−11.7

aCompared with the after-tax income under current law. “Minus” means that after-tax income is reduced.

Suggested Citation:"Appendix E: Revenue Options and Their Implications." National Research Council. 2010. Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press. doi: 10.17226/12808.
×
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A mismatch between the federal government's revenues and spending, now and in the foreseeable future, requires heavy borrowing, leading to a large and increasing federal debt. That increasing debt raises a serious challenge to all of the goals that various people expect their government to pursue. It also raises questions about the nation's future wealth and whether too much debt could lead to higher interest rates and even to loss of confidence in the nation's long-term ability and commitment to honor its obligations. Many analysts have concluded that the trajectory of the federal budget set by current policies cannot be sustained.

In light of these projections, Choosing the Nation's Fiscal Future assesses the options and possibilities for a sustainable federal budget. This comprehensive book considers a range of policy changes that could help put the budget on a sustainable path: reforms to reduce the rate of growth in spending for Medicare and Medicaid; options to reduce the growth rate of Social Security benefits or raise payroll taxes; and changes in many other government spending programs and tax policies. The book also examines how the federal budget process could be revised to be more far sighted and to hold leaders accountable for responsible stewardship of the nation's fiscal future.

Choosing the Nation's Fiscal Future will provide readers with a practical framework to assess budget proposals for their consistency with long-term fiscal stability. It will help them assess what policy changes they want, consistent with their own values and their views of the proper role of the government and within the constraints of a responsible national budget. It will show how the perhaps difficult but possible policy changes could be combined to produce a wide range of budget scenarios to bring revenues and spending into alignment for the long term. This book will be uniquely valuable to everyone concerned about the current and projected fiscal health of the nation.

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