Where is All That Income Tax Revenue Coming From?


Here’s the link to the historical income tax data which some people asked for. The most recent year for which full data seem to be available is 2003 (or the links don’t work for 2004 tax year.)

In an earlier post, I suggested that the “puzzling” excess of personal income tax revenue growth over personal income growth likely reflected disproportionate income growth at the top of the income distribution, where effective tax rates are higher than average.

A quick check of the data shows that income earned by individuals with incomes of more than $100,000 was 19.3% of total income in 2001, but accounted for 27.6% of the growth in total reported income between 2001 and 2003.

This is the income range in which the still quite high top income tax rate kicks in.

One comment

  • Flaherty has appeared in the media arguing that increasing federal revenues confirm the “supply side” notion that lower tax rates generate higher revenues.

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