Much has been written about President Obama’s plans to change Americans’ tax rates (changes that include raising rates for the wealthiest Americans, and cutting rates for everyone else). But there is often confusion about the fact that the rates being discussed are the marginal tax rates — that is, the rates for income above a certain level.
Fortunately, the Congressional Budget Office recently released updated data on effective average federal tax rates — that is, the percentage of their entire incomes that Americans hand over to the federal government in the form of personal income, social insurance, corporate income and excise taxes. As this is effective tax data, it also takes into account the fact that many Americans use deductions that make their taxes lower than statutory rates would imply.
The main findings: The overall effective federal tax rate (the ratio of federal taxes to household income) was 20.7 percent in 2006, with the highest quintile of American households paying 25.8 percent of their income in federal taxes.
read via economix.blogs.nytimes.com