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Office of Tax Analysis: Treasury’s Distribution Methodology

Office of Tax Analysis: Treasury’s Distribution Methodology and Results

Treasury’s Distribution Methodology and Results July 2021

One of the principal tasks undertaken by the Treasury Department’s Office of Tax Analysis (OTA) is the analysis of the distribution of tax burdens. OTA’s distributional analyses show how federal taxes and proposed changes in tax law affect the distribution of after-tax income across families. Distributional analyses provide policy makers with guidance on the fairness of the current or proposed federal tax burden. Distributional analyses do not address economic
efficiency, simplicity, or other important aspects of good tax policy.1

Distribution Methodology
Distributional analysis has several components, of which the major components are:

Taxes Included: All federal taxes are included in Treasury’s analyses: individual and corporate income taxes, payroll taxes (Social Security tax, Medicare tax, and unemployment tax), excises
and customs duties, and estate and gift taxes. Treasury analyses do not include state or local taxes.

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Biden Administration’s FY2022 Budget Tax Proposals

Biden Administration's FY2022 Budget Tax Proposals

The U.S. Department of the Treasury released a key document that explains the Administration’s revenue proposals included in the Budget – the General Explanations of the Administration’s FY2022 Revenue Proposals, or “Greenbook.” The Greenbook further describes revenue measures previously announced by President Biden, including:

AMERICAN JOBS PLAN
Reform Corporate Taxation
  • Raise the Corporate Income Tax Rate to 28 Percent
  • Revise the Global Minimum Tax Regime, Disallow Deductions Attributable to Exempt Income, and Limit Inversions
  • Reform Taxation of Foreign Fossil Fuel Income
  • Repeal the Deduction for Foreign-Derived Intangible Income (FDII)
  • Replace the Base Erosion Anti-Abuse Tax (BEAT) with the Stopping Harmful Inversions and Ending Low-Tax Developments (SHIELD) Rule
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