This article concludes a two-part series on effective marginal tax rates (EMTRs) and the U.S. individual income tax system, examining particular items within the current system that cause the EMTR to deviate from the statutory rate structure and the impact of some recent proposals on EMTRs.
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| Research Fellow Alex Brill |
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| Resident Scholar Alan D. Viard |
Current System
Basic features. The structure of the individual income tax includes the following major components: six progressive statutory marginal tax rates (10, 15, 25, 28, 33, and 35 percent), a system of allowable tax exclusions and deductions that reduce eligible taxpayers' taxable income (and hence their tax liability), and a system of tax credits that reduce tax liability directly. While an inspection of the income tax system demonstrates that average tax rates[2] rise as incomes rise, the same is not always true for marginal tax rates.[3] . . .
The full text of this article is available here.
Alex Brill is a research fellow at AEI. Alan D. Viard is a resident scholar at AEI.
Notes
1. Alex Brill and Alan D. Viard, "Effective Marginal Tax Rates, Part 1: Basic Principles," Tax Notes, Sept. 8, 2008, p. 969, Doc 2008-18694, or 2008 TNT 175-45.
2. The average tax rate is federal income tax divided by income.
3. The marginal tax rate explored here is with respect to pretax wage income. We calculate it as the share of federal income paid in taxes from a $1 increase in wages. An alternative specification, which generally yields slightly higher rates, calculates the marginal rate with respect to taxable income.










