Taxpayers filed 1304 million turn backs for Tax Year 2003.

Taxpayers filed 1304 million turn backs for Tax Year 2003, of which 889 million (or 68 2 percent) were classified as taxable turn backs A taxable return is a answer with a presence of total income tax greater than $0 This exhibits a reduction of 2.2 percent in the number of taxable answers from 2002. Adjusted gross income (AGI) forward these taxable returns rose 19 percent to $5747 billion for 2003 while total income tax knock down 6.1 percent. This decrease in total income tax was attributable to the tax wounds implemented in the passage of the piece of works and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). For the third year in a tumult the average tax rate for taxable turn backs fell, decreasing 1.1 -percentage points to 130 percent for 2003 The country's average tax rate had not been 130 percent or below since 1972 Also noteworthy is the large decline in total income tax of 237 percent from the peak of $981 billion for 2000 to $748 billion for 2003

Taxpayers with an AGI of at least $295495 the top 1 percent of taxpayers, accounted for 168 percent of AGI, representing an increase in income share of 0.7-percentage points from the previous year. These taxpayers accounted for 343 percent of the total income tax reported, an increase from 337 percent in 2002 The top 5 percent of taxpayers accounted for 312 percent of AGI and 544 percent of total income tax. To be included in the top 5 percent a taxpayer must have reported an AGI of $130080 whereas, in 2002 the cutoff for this dispose was $126,525.

This article discusses the individual income tax rates and tax shares and the computation of total income tax for 2003 To bring forward this discussion into perspective, the appendices to the article provide explanations of pitch uponed terms used in the article and describe the income tax pile certain tax law changes, income and tax general [i]or[/i] abstract notions (the "1979 Income Tax Concept" "modified" taxable income, and marginal tax rates), the computation of "alternative minimum taxable income," and the data sources and limitations.

Income Tax Rates

Discussions of income tax rates generally center forward measuring two distinct tax rates: average tax rates and marginal tax rates. Average tax rates are calculated according to dividing some measure of tax through some measure of income. For the statistics in this article, the average tax rate is total income tax (see Appendix A: Explanation of exquisiteed Terms) divided by AGI reported onward returns showing some income tax liability. Measures of marginal tax rates, in succession the other hand, focus upon determining the tax rate imposed in succession the last (or next) dollar of income received by the agency of a taxpayer. For this article, the marginal tax rate is the statutory rate at which the last dollar of taxable income is taxed. (See Appendix D for a more detailed explanation of marginal tax rates.) The following sections describe the measurement of the average and marginal tax rates in more detail, and discuss the statistics based forward these rates for 2003.

Average Tax Rates

Figure A at hands statistics for 1986 through 2003 onward income (based on each year's definition of AGI and upon the common 1979 Income Concept) and taxes reported. (See Appendix D for an explanation of the 1979 Income Concept) These tax years can be partitioned into seven distinct periods:

(1) Tax Year 1986 was the last year below the Economic Recovery Tax Act of 1981 (ERTA81). The tax bracket boundaries, personal exemptions, and standard deductions were indexed for inflation, and the maximum tax rate was 50 percent

(2) Tax Year 1987 was the first year below the Tax Reform Act of 1986 (TRA86). For 1987 a 1-year, transitional, five-rate tax bracket mode of building was established with a partial phase-in of of the present day provisions that broadened the definition of AGI. The maximum tax rate was 385 percent

(3) During Tax Years 1988 by the and of 1990, there was effectively a three-rate tax bracket construction [1]. The phase-in of the provisions of TRA86) continued with a maximum tax rate of 33 percent

(4) Tax Years 1991 and 1992 brought a three-rate tax bracket constitution (with a maximum tax rate of 31 percent) a limitation forward some itemized deductions, and a phaseout of personal exemptions for a certain upper income taxpayers.

(5) Tax Years 1993 by means of 1996 had a five-rate tax bracket mode of building (with a maximum statutory tax rate of 396 percent) a limitation upon some itemized deductions, and a phaseout of personal exemptions for more [i]or[/i] less upper income taxpayers.

(6) Tax Years 1997 from one side 2000 were subject to the Taxpayer Relief Act of 1997 which added three novel capital gain tax rates to the previous rate mode of building to form a new eight-rate tax bracket construction (with a maximum statutory tax rate of 396 percent) papal court Appendix C for a more detailed description of the capital gain rates.

(7) Tax Years 2001 by means of 2003 were affected by sum of two units new laws, the Economic vegetation and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the work at jobss and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). EGTRRA included a recent 10-percent tax rate bracket, as well as reductions in tax rates for brackets higher than 15 percent of one-half percentage point for 2001 and individual percentage point for 2002. It also included increases in the child tax credit and an increase in alternative minimum tax exemptions. TY 2003 in subordination to JGTRRA, saw additional rate reductions in ordinary marginal tax rates higher than the 15-percent rate, as well as expansions to particular income gates in the rates from 15 percent and below. Also, the rate for most numerous long-term capital gains was reduc from 20 percent to 15 percent Further, qualified dividends were taxed at this same 15-percent rate. These changes are detailed in Appendix C (under Tax Rate Reduction).