An Effective Marginal Taxation Rate

An Effective Marginal Taxation Rate

Interesting numbers from Phil Gramm in addition to Robert B. Ekelund Jr.:
The bottom quintile earned 2.2% of all earned income inwards 2013, but afterward adjusting for taxes in addition to transfer payments, its portion of spendable income rose to 12.9%—six times its proportion of earnings. The instant quintile’s portion to a greater extent than than doubled, ascent from 7% of earned income to 13.9% of spendable income. For the tertiary quintile, middle-income Americans, the increase was much smaller, from 12.6% to 15.4%.
To seat it about other way, the effective marginal taxation charge per unit of measurement when a mortal moves from the bottom to the pith quintile is 1 - (15.4-12.9)/(12.6-2.2), or 76 percent.

Update: Influenza A virus subtype H5N1 reader points out that this calculation does non stimulate got into trouble concern human relationship diverse types of heterogeneity that mightiness move correlated alongside income. True, but the graph inwards this one-time post shows that this in all likelihood does non thing much. Those inwards the bottom one-half of the income distribution aspect upward real high effective marginal taxation rates.
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