Income Tax Statistics for Sample Families, 2003

In the U.S. federal income tax system, the effective marginal tax rates and the average tax rates vary significantly from the statutory tax rates. These differences are important since they influence the incentives to work, save and to comply with the tax system. This article measures these differences for single individuals and families with different income levels and discusses why these differences exist. Often, hidden taxes and subsidies interact, making the effective marginal tax rate an amalgam of different effects.