How Fair? Changes in Federal Income Taxation and the Distribution of Income 1978 to 1998
at the Andrew Young School of Policy Studies

How Fair? Changes in Federal Income Taxation and the Distribution of Income 1978 to 1998 (pdf)

by James Alm, Fitzroy Lee, and Sally Wallace
July 2002

Keywords: Taxation, Progressivity, Distribution of Income

This paper examines the impact of federal tax policy on the distribution of income. We find that, even when account is taken of the induced effect of changes in federal income tax laws on pre-tax income, the individual income tax structure has been less successful in equalizing after-tax income since the 1980s and into the early 1990s. We also find that a given tax law's equalizing effect on the distribution of income is significantly affected by the pre-tax distribution of income and thus by the year in which the law is implemented. Finally, we find significant regional differences in the impact of the changes in federal tax law on tax progressivity.

Comments and questions regarding this paper may be directed to James Alm at jalm@gsu.edu.