WASHINGTON — LAST summer, when the Clinton budget package finally passed Congress, a substantial number of middle-class Americans believed that their federal income taxes would rise.
Even though the tax hikes were retroactive to cover all of 1993, the tax returns that Americans are filing by April 15 are not bearing much bad news.
The average tax refund on the early returns this year is $1,028 - up 5.8 percent from last year.
Of course, after a year when the economy improved markedly and incomes rose, people may be paying more tax dollars as well as getting more back. But actual federal tax rates only rose for about 1.2 percent of American households at the top of the income scale, while dropping for almost 17 percent at the bottom.
The shift in tax burden toward the wealthy has only been slight, however, compared with a decades-old trend away from progressive taxes.
``By historical standards,'' says James Steele, author with Donald Barlett of ``America: Who Really Pays the Taxes?,'' last summer's tax changes amounted to ``a very modest increase on the rich.''
The highest federal income tax rate that the wealthiest now pay is 39.6 percent. For much of this century, the top marginal rate was above 70 percent. And by contrast, a family of four earning a median income 40 years ago would take personal exemptions amounting to 57 percent of their income. So less than half the family's earnings were taxable. This year, the average family of four can only exempt 25 percent of its income.
Likewise, Social Security taxes 40 years ago amounted to 1.3 percent of the median family income. Now they are 7.65 percent of median family income.
Steady tax take
For families who earn incomes in the middle 60 percent of the scale - from $20,000 up to about $84,000 for a family of four - the total bite of all federal taxes has held about the same from 1977 to last year, as a percent of their income.
It stayed roughly the same for the bottom 20 percent as well, until last year's expansion of the earned-income tax credit which will deliver a healthy tax cut - actually a wage-augmenting payment - to most of those families.
For the top 1 percent of incomes - those over $333,000 for a family of four - total federal taxes as a share of income dropped from 35.4 percent in 1977 to 26.3 percent in 1990. The changes made last year will boost those tax rates several percentage points or more for that group.
Decline in rates
Federal income tax rates have declined for almost everyone since the late 1970s. For most families, the difference was made up by the raising of Social Security taxes.
Other trends have been at work as well that have shifted the tax burden downscale from the wealthy to the middle class.
State tax rates have grown, while the federal income tax rates have dropped. State taxes in general tend to be far less progressive than federal, partly because states rely heavily on sales taxes. In 1950, 69 percent of taxes were federal and only 15 percent state. By 1991, the latest figures available, only 55 percent were federal and 27 percent were state.
Tax year 1993 held little bad news on the state-tax front, however. Tax policy changes enacted last year added $3 billion nationally, less than inflation and only a fraction of the increases in the previous few years.
Overall, the bite that government takes out of the economy peaked in 1969 and 1970 at about 23 percent of the gross domestic product. The take in 1991 was 20.6 percent, according to the Advisory Commission on Intergovernmental Relations.
By April 1, nearly 62 million tax returns had been filed to the Internal Revenue Service, out of an expected 117 million. About 12 million of those had been filed electronically, up 8.7 percent from a year ago.