Who Pays Taxes? A Dynamic Perspective

This paper examines income and payroll tax payments using a panel of individual income tax returns from 2001–2011. Over that time, the share of families paying positive income taxes decreased from 62 to 53 percent, and the share of individuals fell from 69 to 62 percent. Including payroll taxes increases the share of individuals paying positive taxes in 2011 to 71 percent, but does not alter the trend. Across years, positive tax liability is more persistent than non-payment or negative liability. Finally, across a five-year window, 13 percent of individuals paid positive taxes in no year, while 20 percent had a zero or negative tax liability on average.