Table 1.
Tax Rates and Taxes Paid Under Different Scenarios
| Low | Middle | High | Very High | |
|---|---|---|---|---|
|
Baseline Simulation (2010 values) (2060 per-household GDP = $149,400)
| ||||
| Share of Households | .256 | .468 | .251 | .025 |
| Share of Income | .076 | .336 | .350 | .236 |
| Marginal Tax Rate | .180 | .230 | .340 | .420 |
| Average Tax Rate | .083 | .143 | .228 | .347 |
| Share of Taxes Paid | .030 | .223 | .369 | .378 |
|
| ||||
|
Scenario 1: 8% GDP Raised through Income Tax (2060 per-household GDP = $133,900)
| ||||
| Marginal Tax Rate | .218 | .318 | .550 | .700 |
| Average Tax Rate | .117 | .206 | .359 | .590 |
| Share of Taxes Paid | .030 | .224 | .382 | .364 |
| Increase in taxes paid (present value $1000) | 7.4 | 29.6 | 104.7 | 900.8 |
| Utility loss per dollar increase in taxes | 1.18 | 1.70 | 2.79 | 2.65 |
|
| ||||
|
Scenario 2: 8% GDP Raised through Payroll Tax (2060 per-household GDP = $141,700)
| ||||
| Marginal Tax Rate | .304 | .354 | .464 | .544 |
| Average Tax Rate | .171 | .234 | .327 | .450 |
| Share of Taxes Paid | .042 | .254 | .367 | .337 |
| Increase in taxes paid (present value $1000) | 21.8 | 52.2 | 110.3 | 743.8 |
| Utility loss per dollar increase in taxes | 1.20 | 1.23 | 1.32 | 1.45 |
|
| ||||
|
Scenario 3: 8% GDP Raised through Income Tax, Gini Constant (2060 per-household GDP = $140,900)
| ||||
| Marginal Tax Rate | .280 | .340 | .450 | .528 |
| Average Tax Rate | .171 | .238 | .329 | .450 |
| Share of Taxes Paid | .042 | .256 | .366 | .336 |
| Increase in taxes paid (present value $1000) | 19.1 | 47.5 | 99.4 | 662.0 |
| Utility loss per dollar increase in taxes | 1.24 | 1.35 | 1.41 | 1.51 |
|
| ||||
|
Scenario 4: 4% GDP Raised through Income Tax (2060 per-household GDP = $141,900)
| ||||
| Marginal Tax Rate | .198 | .274 | .4300 | .562 |
| Average Tax Rate | .100 | 173 | .286 | .464 |
| Share of Taxes Paid | .029 | .223 | .370 | .378 |
| Increase in taxes paid (present value $1000) | 3.5 | 14.8 | 49.8 | 559.2 |
| Utility loss per dollar increase in taxes | 1.17 | 1.66 | 2.27 | 1.89 |
Notes:
All values below the first baseline panel are values for 2060. The marginal tax rate shown is the tax rate on earned income. For the income tax, the tax on interest income is one-half the earned income tax rate. The progressive tax schedule has an $2400 exemption that rises with productivity growth (1.3% annually). The average tax rate is the total tax paid as a share of adjusted gross income for each group. Change in utility is measured as the change in the present discounted value of utility times the marginal utility of first-period consumption in each income group.