TAXES AND INCOME: A MICROUNIT ANALYSIS

The paper details the methodology used and the results obtained in a recently completed study of the total U.S. tax burden based on microdata survey files. The method of constructing the data base—the 1966 MERGE file—is discussed, and the needed imputations and adjustments to income and taxes to bring the file totals up to national income aggregates are described. An explanation is included of adjusted family income, a unique income concept used in the study to measure and compare tax burdens.
The study involved the evaluation of errective tax burdens under eight different assumptions regarding the incidence of the various major taxes. Those assumptions are detailed and the results of the study are presented. The essential conclusion of the study is that the overall impact of the tax system is virtually proportional for 90 percent of the families in the United States regardless of the incidence assumptions used. However, substantial differences in tax burdens were found among various subgroups of the population.