IRS News Release  
August 30, 1991

IRS Publishes New Statistics on
1987 Individual Income Tax

The average individual income tax liability for 1987 was $4,257, a decrease of $117 from the $4,374 for 1986, according to the summer 1991 issue of the Internal Revenue Service quarterly publication, the "Statistics Income Bulletin."

Data for 1987, the first year in which most provisions of the Tax Reform Act of 1986 were in place, indicate the total income tax, including a revised alternative minimum tax, was $369.2 billion, 2 percent more than 1986. Tax reform reduced the number of marginal tax rates for 1987 from 16 to 6. The statistics classify the tax according to these 6 rates.

A study of sole proprietor returns indicates profits from non-farm sole proprietors rose for the seventh consecutive year to $132.7 billion for 1989, an increase of $6.4 billion. The 5-percent increase in profits for 1989 was the smallest since 1982 and was in sharp contrast to the annual increases that occurred after 1982. Total receipts rose 3.1 percent from 1988 to 1989, in contrast to the 10-percent increase from 1987 to 1988.

Data from corporation income tax returns for 1986 show the 7,500 largest foreign corporations controlled by large U.S. multinational firms generated net after-tax profits of $38 billion from business receipts of $590 billion. Assets of these controlled foreign corporations totaled $740 billion.

Other data on corporation income tax returns in this issue further show that for 1987, approximately $2.8 billion in "possessions tax credit" was claimed by U.S. corporations, an increase of more than 14 percent over the $2.4 billion claimed for 1985. Total U.S. income tax liability of these corporations, after credits, was only $30.2 million, although the companies generated net income of almost $7.1 billion.

The summer bulletin also has a summary of corporation income tax return preliminary statistics for 1988; selected historical and other statistics based on corporation, individual and other tax returns; tax collections and refunds; and projections of returns to be filed. This issue's historical section has a detailed analysis of 1989 individual income and federal tax data by size of adjusted gross income for each state.

The "Statistics of Income Bulletin" is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. The annual subscription rate is $20 for four issues; a single issue costs $7.50. It is published four times a year. For other statistical information, write to the Director, Statistics of Income Division, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608, or telephone the statistical information services office at (202) 874-0410 (a toll call).

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