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How much do hidden federal taxes reduce the average annual income of U.S. households?

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In 2018 (latest data), hidden federal taxes reduced the average income of U.S. households by about $7,000. Hidden taxes are those that are not apparent to the individuals who pay them because they generally don't appear on purchase receipts, paychecks, or tax returns. As explained by the director of the Congressional Budget Office "the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government." The distribution of hidden taxes is an inexact science, but a diverse array of credible sources find that (1) employer payroll taxes are generally borne by employees in the form of lower wages, (2) excise taxes are generally borne by consumers in the form of higher prices, and (3) corporate income taxes are jointly borne by (a) employers in the form of lower profits, (b) employees in the form of lower wages, and (c) possibly consumers in the form of higher prices.




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