Trends in the Distribution of Household Income · 2019-12-11 · Household Income. University of...

Congressional Budget Office

Trends in the Distribution of Household Income

University of Michigan’s65th Annual Economic Outlook Conference

Ann Arbor, MI

November 16, 2017

Kevin PereseTax Analysis Division

As developmental work for analysis for the Congress, the information in this presentation is preliminary and is being circulated to stimulate discussion and critical commentary.

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Thirty Years of Distributional Analyses

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Distribution of Income, 2013

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Distribution of Income, 2013

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Distribution of Income, 2013

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Distribution of Income, 2013

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Income Before Transfers and TaxesMarket Income: Income from labor, business, capital (including capital gains), and other nongovernmental income sourcesSocial Insurance Benefits: Benefits from Social Security, Medicare, and unemployment insurance

Means-Tested Transfers Transfers from Medicaid, SNAP, SSI, housing assistance programs, and other assistance programs

Federal Taxes Individual income taxes, payroll taxes, corporate income taxes, and excise taxes

Components of Household Income

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Data SourcesIRS’s Statistics of Income and Census Bureau’s Current Population Survey

Unit of AnalysisHouseholds

Time Period1979 to 2013

Overview

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Income Before Transfers and Taxes, 2013

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Income Before Transfers and Taxes, 2013

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Distribution of Income, 2013

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Average Means-Tested Transfer Rates, 2013

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Average Means-Tested Transfer Rates, 2013

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Distribution of Income, 2013

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Average Federal Tax Rates, 2013

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Average Federal Tax Rates, 2013

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Average Federal Tax Rates, 2013

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Average Federal Tax Rates, 2013

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Distribution of Income, 2013

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Income After Transfers and Taxes, 2013

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Income After Transfers and Taxes, 2013

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Trends,1979 to 2013

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Cumulative Growth in Income Before Transfers and Taxes, 1979 to 2013

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Cumulative Growth in Income Before Transfers and Taxes, 1979 to 2013

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Gini Coefficients, 1979 to 2013

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Gini Coefficients, 1979 to 2013

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Average Means-Tested Transfer Rates,

1979 to 2013

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Average Means-Tested Transfer Rates, 1979 to 2013

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Average Means-Tested Transfer Rates, Lowest Quintile, 1979 to 2013

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AverageFederal Tax Rates,

1979 to 2013

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Average Federal Tax Rates, 1979 to 2013

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Average Refundable Tax Credit Rates, 1979 to 2013

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2013 Tax Law Changes

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2013 Tax Law Changes

American Taxpayer Relief Act (2012)Top marginal tax rate increased from 35 percent to 39.6 percent; long-term capital gains rate increased from 15 percent to 20 percent

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (2010)Temporary reduction in payroll tax rates (from 6.2 percent to 4.2 percent) expired at end of 2012

Affordable Care Act (2010)Additional Medicare payroll tax of 0.9 percentage points imposed for high-earning taxpayers; 3.8 percent surtax on net investment income imposed for high-income taxpayers

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Cumulative Growth in Income After Transfers and Taxes, 1979 to 2013

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Cumulative Growth in Income After Transfers and Taxes, 1979 to 2013

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Gini Coefficients, 1979 to 2013

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Gini Coefficients, 1979 to 2013

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What Happened in 2014?

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Medicaid ExpansionOutlays

Affordable Care Act, 2014

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Medicaid ExpansionCost-sharing Reductions Outlays

Affordable Care Act, 2014

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Medicaid ExpansionCost-sharing ReductionsPremium Tax Credits

Outlays

Affordable Care Act, 2014

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Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax Credits

Revenues

Outlays

Affordable Care Act, 2014

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Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax CreditsIndividual Mandate Revenues

Outlays

Affordable Care Act, 2014

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Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax CreditsIndividual MandateHealth Insurance Excise Tax

Revenues

Outlays

Affordable Care Act, 2014

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Medicaid Expansion (+)Cost-sharing Reductions (+)Premium Tax Credits (+)Individual Mandate (-)Health Insurance Excise Tax (-)

Revenues

Outlays

Affordable Care Act, 2014

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Medicaid Expansion (+)Cost-sharing Reductions (+)Premium Tax Credits (+)Individual Mandate (-)Health Insurance Excise Tax (-)Net Investment Income Tax (-)Additional Medicare Tax (-)

Revenues(Enacted 2014)

Revenues(Enacted 2013)

Outlays

Affordable Care Act, 2014

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Medicaid Expansion (+)Cost-sharing Reductions (+)Premium Tax Credits (+)Individual Mandate (-)Health Insurance Excise Tax (-)Net Investment Income Tax (-)Additional Medicare Tax (-)Net Effect

38.43.0

14.71.78.6

22.56.9

$16.4(billion)

Affordable Care Act, 2014