Do U.S. middle-income households now pay a higher portion of all their income (cash and benefits) in federal taxes than they paid on average for the past 3 decades?
According to the latest available data, the average effective federal tax rate of U.S. middle-income households was 12.8% in 2013. Over the previous 3 decades, this rate averaged 15.7%. Some of the reasons for the decline include increasing non-taxable government benefits, increasing non-taxable employee fringe benefits, and tax cuts. Other income groups have similar trends, except for the top 20%, which now pays 26.3% of its income in federal taxes, as opposed to 25.4% over the previous 3 decades.