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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.
1CO N GR ES S IO N A L B UDGE T O F F IC E
Thirty Years of Distributional Analyses
2CO N GR ES S IO N A L B UDGE T O F F IC E
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Distribution of Income, 2013
3CO N GR ES S IO N A L B UDGE T O F F IC E
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Distribution of Income, 2013
4CO N GR ES S IO N A L B UDGE T O F F IC E
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Distribution of Income, 2013
5CO N GR ES S IO N A L B UDGE T O F F IC E
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Distribution of Income, 2013
6CO N GR ES S IO N A L B UDGE T O F F IC E
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
7CO N GR ES S IO N A L B UDGE T O F F IC E
Data SourcesIRS’s Statistics of Income and Census Bureau’s Current Population Survey
Unit of AnalysisHouseholds
Time Period1979 to 2013
Overview
8CO N GR ES S IO N A L B UDGE T O F F IC E
Income Before Transfers and Taxes, 2013
9CO N GR ES S IO N A L B UDGE T O F F IC E
Income Before Transfers and Taxes, 2013
10CO N GR ES S IO N A L B UDGE T O F F IC E
Distribution of Income, 2013
11CO N GR ES S IO N A L B UDGE T O F F IC E
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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14CO N GR ES S IO N A L B UDGE T O F F IC E
Average Federal Tax Rates, 2013
15CO N GR ES S IO N A L B UDGE T O F F IC E
Average Federal Tax Rates, 2013
16CO N GR ES S IO N A L B UDGE T O F F IC E
Average Federal Tax Rates, 2013
17CO N GR ES S IO N A L B UDGE T O F F IC E
Average Federal Tax Rates, 2013
18CO N GR ES S IO N A L B UDGE T O F F IC E
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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
21CO N GR ES S IO N A L B UDGE T O F F IC E
Trends,1979 to 2013
22CO N GR ES S IO N A L B UDGE T O F F IC E
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
24CO N GR ES S IO N A L B UDGE T O F F IC E
Gini Coefficients, 1979 to 2013
25CO N GR ES S IO N A L B UDGE T O F F IC E
Gini Coefficients, 1979 to 2013
26CO N GR ES S IO N A L B UDGE T O F F IC E
Average Means-Tested Transfer Rates,
1979 to 2013
27CO N GR ES S IO N A L B UDGE T O F F IC E
Average Means-Tested Transfer Rates, 1979 to 2013
28CO N GR ES S IO N A L B UDGE T O F F IC E
Average Means-Tested Transfer Rates, Lowest Quintile, 1979 to 2013
29CO N GR ES S IO N A L B UDGE T O F F IC E
AverageFederal Tax Rates,
1979 to 2013
30CO N GR ES S IO N A L B UDGE T O F F IC E
Average Federal Tax Rates, 1979 to 2013
31CO N GR ES S IO N A L B UDGE T O F F IC E
Average Refundable Tax Credit Rates, 1979 to 2013
32CO N GR ES S IO N A L B UDGE T O F F IC E
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
34CO N GR ES S IO N A L B UDGE T O F F IC E
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
36CO N GR ES S IO N A L B UDGE T O F F IC E
Gini Coefficients, 1979 to 2013
37CO N GR ES S IO N A L B UDGE T O F F IC E
Gini Coefficients, 1979 to 2013
38CO N GR ES S IO N A L B UDGE T O F F IC E
What Happened in 2014?
39CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionOutlays
Affordable Care Act, 2014
40CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionCost-sharing Reductions Outlays
Affordable Care Act, 2014
41CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionCost-sharing ReductionsPremium Tax Credits
Outlays
Affordable Care Act, 2014
42CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax Credits
Revenues
Outlays
Affordable Care Act, 2014
43CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax CreditsIndividual Mandate Revenues
Outlays
Affordable Care Act, 2014
44CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid ExpansionCost-sharing ReductionsPremium Tax CreditsPremium Tax CreditsIndividual MandateHealth Insurance Excise Tax
Revenues
Outlays
Affordable Care Act, 2014
45CO N GR ES S IO N A L B UDGE T O F F IC E
Medicaid Expansion (+)Cost-sharing Reductions (+)Premium Tax Credits (+)Individual Mandate (-)Health Insurance Excise Tax (-)
Revenues
Outlays
Affordable Care Act, 2014
46CO N GR ES S IO N A L B UDGE T O F F IC E
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
47CO N GR ES S IO N A L B UDGE T O F F IC E
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
