Tuesday, October 11, 2005
The Tax Foundation has published Countdown to Tax Reform, Part I: Not Your Father's Middle Class as part of a series in anticipation of the expected November 1 release of the report of President’s Advisory Panel on Federal Tax Reform, Here is a taste:
As lawmakers begin to debate the various tax reform plans under consideration, some groups will urge them to “protect the middle-class” from any change in the tax burden they already bear. By middle-class, it is usually meant those taxpayers in the statistical middle 20 percent of the income scale—those taxpayers earning between roughly $25,000 and $42,000 per year.
But over the past few decades the composition of American taxpayers has changed dramatically—especially among those taxpayers in the statistical middle. The stereotype of “Ozzie and Harriet,” the married, single-earner family of the 1950s is no longer typical in the middle one-fifth of the income scale. On the contrary, the middle one-fifth of the income scale looks more like the cast from the popular TV program “Friends”—single individuals and unmarried parents with children....
The explosive growth in the number of single taxpayers—and single-parent households—over the past four decades has had a profound effect on the composition of the statistical “middle-class” and on the overall distribution of income of all taxpayers.... In an almost mirror image of each other, the lower income groups are dominated by single filers while the upper income groups are overwhelmingly populated by married filers.
[click on chart to enlarge]