THE personal-income-tax base at assumed levels of national income payments, with designated personal exemptions and various schedules of tax rates, was estimated by two methods. One method was developed for individual net incomes below $5000 and another for individual net incomes of $5000 and over.
Estimates for this lower-income group2 involve three steps: (1) analysis of 1941 income-tax returns; (2) adjustment of 1941 returns by means of a study of the distribution of income made by the Division of Tax Research;3 (3) inflation of the adjusted returns and income to the assumed level of national income.
Analysis of 1941 Returns . The 1941 returns were tabulated by exemption status to form three distributions: (1) family returns, composed of joint returns and returns of single individuals claiming head-of-family exemption; (2) separate returns of husbands and wives and community property returns; and (3) single returns of single and married individuals claiming single exemption. This tabulation was made directly from the tables presented in Statistics of Income for all returns on Form 1040. Since returns on Form 1040A were classified by gross income, they were redistributed into____________________