The CBO’s look at tax rates and income levels for everyone—even the 1 percenter’s

By Dian Vujovich

Hot off the CBOs presses: Yesterday’s news.

The Congressional Business Office (CBO) has just published data about the federal tax and income rates for the years 2008 through 2009. Plus, charts showing how both have changed from 1979 to 2009.

I don’t have to tell you that the past few years haven’t been rip-roaring financially successful ones for the majority of Americans. Since 2007, many have suffered losses in the stock markets, seen the value of their homes drop precipitously and have- –or know of others— who have lost their jobs. As a result, many have had to change their living situations to accommodate their losses as well as alter their dreams: Instead of hoping to retire at say age 65, working until age 70 and beyond has become the new de rigueur.

Briefly, and from the CBO report titled “The Distribution of Household Income and Federal Taxes 2008 and 2009” is the following:

• Re tax rates: The average federal tax rate for all households fell 2.5 percentage points from 2007 to 2009, reaching the lowest level seen in the 1979-2009 period.

• The largest decline was for households in the lowest income quintile. With the decline in before-tax income offset in part by the decrease in federal taxes, average after-tax income fell 10 percent in real terms.

• Re tax liabilities: In 2009, the share of federal taxes owed was 0.3 percent for households in the lowest income quintile, 9.4 percent for households in the middle quintile, and 67.9 percent for those in the highest quintile. Declines in before-tax income among households in the top income 1 percentile lowered their share of federal tax liabilities from 26.7 percent to 22.3 percent between 2007 and 2009

Regarding the 1 percenter’s, in 1979, their average federal income tax rate was 35.1 percent. In 1995 and 1996 it was higher at 35.3 and 35.2 percent respectively. The lowest federal income tax rate for this group of ultra-wealth was 24.8 percent in 1988.

The average individual tax rate for the 1 percenter’s between 1979 and 2009 ranged from a low of 18.6 percent in 1986 and highest in 1997 when their tax rate averaged 24.7 percent.