Six Tax Laws Later: How Individuals' Marginal Federal Income Tax Rates Changed between 1980 and 1995

摘要

The authors examine the evolution of marginal federal income tax rates from 1980 to 1995 using panel and cross-section data. Results show that marginal rates fell dramatically for most taxpayers between 1980 and 1995. Whereas more than three-quarters of taxpayers faced statutory tax rates above 15 percent in 1980, less than one-quarter of taxpayers were in that situation in 1995. Individuals' tax rates also rose and fell due to life-cycle changes in income. Young people (ages 30-44) were twice as likely to experience tax rate increases as older taxpayers. Nonetheless, the majority of taxpayers in every age group experienced rate reductions. The large tax rate cuts in 1981 and 1986 clearly dominate life-cycle effects.