Credit portal




What do taxes do

what do taxes do

Suppose taxes on household #5 were increased by $10,000 (from $31,320 to $41,320). Total taxes would also increase $10,000 so average taxes would increase $2,000 per household. The new mean would be $10,400 in taxes and the new mean tax rate would be 26%.

Their story: "Taxes on the average household increased $2,000, from 21% to 26% of income."

Reality: Only the rich paid more taxes; median taxes were unchanged.

Center on Budget and Policy Priorities uses "Average" for "Mean"

Center on Budget and Policy Priorities uses "Typical" for "Median"

For federal and state taxes combined, the median tax rate is about 3 percentage points lower

than the average tax rate, because federal taxes are progressive.

4) Which taxes?

  • The right-wing agenda is to repeal the progressive income tax.
  • Hence, their discussions will imply that the federal income tax is at issue. E.g. someone will pick April 15th to complain about the total level of taxation.

Reality: Table 2 shows taxes typically paid in 1996 by a household of median income. Note that the federal individual income tax is about one-fifth of taxes paid by median households. 72% of households pay more payroll taxes than federal income taxes. The median household pays about $3,700 in state and local taxes.

Category: Taxes

Similar articles: