Study Finds Tax Burden Grew for Lower-Income Households

For every $100 earned by an American family, the four largest taxes consumed $21.90, a new government study shows.

And while that is only a dime more than a year earlier, the report on taxes and income for 1984, the last year for which such a detailed analysis has been made, found the bite rising for those least able to pay, while upper-income Americans had falling tax rates.

The Census Bureau study of after-tax income found that 92.4% of all U.S. households paid at least one of the four major taxes--federal income, state income, Social Security and real estate.

92% Paid at Least One

That was up from 92.1% who paid at least one of those taxes in 1983.

And while most of those taxes are progressive--meaning they increase according to rising income--Americans at the lowest end of the income scale found their tax burden rising while those earning more paid a smaller share, the study found.

For example, for those households earning under $10,000 that paid any taxes at all, the share was 9.8% of income in 1984, up from 9.3% a year earlier.

Households in the $10,000-to-$14,999 income bracket saw their tax burden rise from 11.5% to 11.6% over the year. Those earning $15,000 to $19,999 were unchanged, paying 14.5% each year. From $20,000 on up, however, the tax burden declined.

Households with incomes of $50,000 and over fared best in year-to-year terms, even though they also paid the most. That group paid 28.1% of income in taxes in 1984, down from 29% a year earlier.

Tax Burden Decreased

Households earning $30,000 to $34,999 also did well, with their tax share falling from 21% to 20.4%, and the tax debt of $35,000-to-$39,999 households dropped from 22.2% to 21.7%.

The main reason for the tax increase appears to have been Social Security. Not only is the tax rate higher than in past years, it is being applied to gradually increasing income levels as the economy improves.

Thus, the average household Social Security payment rose $74 from 1983 to 1984, from $1,625 to $1,699.