Federal Income Tax Receipts and Overall Tax Rate

Paper Summary:

This paper investigates whether and how the federal income tax receipts change given the overall tax rate for individual income taxes. The paper also investigates whether the tax receipts exhibit a diminishing return as marginal tax rates increase. The paper concludes that there exists a meaningful relationship between the marginal income tax rate and the marginal income tax receipts.

Outline
Introduction
Model
Model Results
Initial Model
Alternative Model
Alternate Model End Notes
Initial and Alternative Model Results
Data Mining
Data Mining Results
Conclusion
Appendix A: Figures
Appendix B: Data Sources

From the Paper:

"Now, disregarding all the statistical minutia that may or may not be relevant the author will make the following observations regarding the alternate model. This model is depicting the predictive power of the variance of the marginal individual income tax rates among all five income quintiles to the income tax receipts at the federal level. It is apparent from the model that nearly a quarter of the variation in the marginal tax receipts can be predicted through the marginal tax rate, ceteris paribus."

Sample of Sources Used:

• Laffer, Arthur B. June 1, 2004. Executive Summary: The Laffer Curve: Past, Present, and Future. Retrieved from http://www.zianet.com/NMIRI/e_laffercurve.htm
• CBO individual tax rate data. 2008. Retrieved from http://www.cbo.gov/Spreadsheet/6133_Tables.xls
• Individual Income Tax Receipts. 2008. Retrieved from http://www.whitehouse.gov/news/usbudget/budget-fy2004/hist.html
• Individual Income Taxes as a Share of GDP. 2008. Retrieved from http://www.whitehouse.gov/news/usbudget/blueprint/bud02.html
• Real GDP. 2008. Retrieved from http://research.stlouisfed.org/fred2/categories/18

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• Analytical Essay # 111359 : "Tax Equity and Fiscal Responsibility Act"
• Term Paper # 101307 : "State and Local Tax Issues"

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