The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.
A VISUAL GUIDE TO INCOME IN AMERICA
AND HOW IT IS T AXED
Every year, as April approaches, Americans spend hours filing their
income tax returns. As a result, most adult Americans are somewhat
familiar with how the individual income tax works. In fact, the income
tax code is one of the only parts of federal law that almost every
American has dealt with personally.
But filling out a tax return offers only a small glimpse of the entire
federal income tax system. The individual income tax creates economic
and social consequences larger than any single tax return can reflect.
In order for taxpayers to comprehend these consequences, the income
tax needs to be examined from several angles: as a source of federal
revenue, a tool for social welfare spending, a set of economic incentives,
and a subject of policy debates.
Understanding the income tax also requires context. Income in America
looks different today than a few decades ago, due to demographic
and economic forces. In addition, the federal income tax should be
understood against the backdrop of the federal tax system as a whole
and in comparison with income taxes around the world.
This book is your visual guide to these different ways of understanding
the federal income tax. In over 40 charts, we lay out a picture of income
in America and of the income tax’s economic and fiscal effects.
In addition, this book provides background on some of the key issues of
the tax reform debate. How progressive is the federal income tax? How
does it affect decisions about work, saving, and marriage? What is its
effect on the U.S. economy? This book provides insight into each of these
questions and several more.
As tax reform becomes an increasingly important national topic of
discussion, our hope is to arm citizens and lawmakers with the facts
necessary for an honest and productive debate.
These charts were created and compiled by Analyst Scott Greenberg, in
collaboration with Tax Foundation staff.