During the past 40 years, the
federal income tax burden on a family of four has increased
dramatically as a share of the family's income.
- The average American family now pays 24.5 percent of its
income to the federal government in taxes, compared with
only 2 percent in 1950.
- When state and local taxes are included, the government
now takes 37.6 percent of the income of the average
family with children.
- Among married-couple families where both the husband and
wife are employed, two-thirds of the wife's earnings go
to pay for increased federal taxes and only one-third to
supporting the family.
One root cause of this antifamily bias in the tax code is the
eroding value of the personal exemption.
- In 1948, the $600 personal exemption for children
shielded 68 percent of the average family's income and
the standard deduction shielded the rest.
- To have the same relative value today, the personal
exemption would have to be about $7,000 to $8,000.
The second tax blow to family finances has been the increase
in Social Security payroll taxes.
- In 1948, the Social Security tax was 2 percent on annual
wages of up to $3,000 - 1 percent nominally paid by the
employee and 1 percent paid by the employer.
- By 1992, the combined Social Security tax had risen to
15.3 percent on annual wages of up to $55,500.
Families with children now have less aftertax income than
elderly households, single persons and couples without children.
Source: Robert Rector, "Reducing the Crushing Tax Burden
on America's Families,
" Backgrounder No. 981, March 7, 1994, Heritage Foundation,
214 Massachusetts Avenue,
NE, Washington, DC 20002, (202) 546-4400.