Figures Show Tax Burden Falling For US Taxpayers

by Mike Godfrey, Tax-News.com, Washington

14 April 2004

The total effective federal tax rate in the United States fell to an average of 21.5% in 2001, the lowest level since 1992, according to statistics released by the Congressional Budget Office recently.

The figures, which measure the burden of income, payroll and excise taxes, show that on a percentage basis, the tax rate declined for the lowest fifth of incomes by 19% to 5.4% in 2001 compared to the previous year. The overall figure of 21.5 % was 7% lower than in 2000.

Tax analysts have attributed the sharp decline in the tax burden for those on lower incomes to the expanded 10% tax bracket and the increased child tax credit contained in President Bush’s 2001 tax bill.

However, for those nearer the top end of the income scale, economic factors were mainly responsible for the drop in tax contributions rather than tax cuts, with the declining stock market accounting for a fall in capital gains tax.

These same economic forces also reduced the corporate share of the tax burden from 2.5% in 2000 to 1.8% in 2001 as the economy slowed.

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