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The Clinton Administration Oversaw the Highest Increase in Taxes per Household
The average American household's tax burden has increased steadily since 1965. The largest increase occurred during the Clinton Administration, when taxes per household rose over 20 percent. Today's tax burden is near the highest in history, even with the 2001 and 2003 tax cuts.
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Corporate Income Tax Receipts Stay Constant Even as Tax Rates Decline
The top corporate tax rate was reduced sharply under President Reagan, from 46 percent to 34 percent. Yet today, with a federal corporate tax rate of 35 percent, America has one of the highest corporate tax rates in the developed world.
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Corporate Income Tax Cuts Boost Federal Revenues
The economy boomed after the 2003 tax cuts, leading to the highest level of corporate tax receipts in over 20 years. Although revenues recently have fallen significantly, this is due to a weakened economy rather than changes in tax policy.
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Current Tax Receipts Below Historical Average
Since World War II, tax receipts have averaged around 18 percent of the economy, or gross domestic product (GDP). Tax receipts were 17.7 percent of GDP in 2008, slightly below the 60-year average, and are projected to fall to 15.4 percent in 2009 due mostly to the struggling economy.
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Federal Government Revenues Have More Than Tripled Since 1965
Government revenue has soared by more than $1.55 trillion since 1965, in part because top marginal income, capital gains, and corporate tax rates were cut.
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Income Tax Receipts Stay Constant Even as Tax Rates Decline
The most dramatic decline in the top individual income tax rate, from 70 percent to 28 percent, occurred during the Reagan Administration, yet tax receipts remained relatively constant.
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Connecticut, New York, and New Jersey Have the Highest Percentage of Taxpayers Paying the Alternative Minimum Tax
The nefarious AMT was enacted in 1969 to prevent a small number of wealthy taxpayers from using legitimate deductions and credits to avoid paying taxes altogether. Since then, the AMT's reach has expanded relentlessly because it was never indexed to inflation. Absent reform, 30.3 million tax filers would be forced to pay an average of almost $3,403 more in taxes in 2009.
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A Breakdown of Federal Revenue Sources
Social insurance taxes, which fund programs such as Social Security and Medicare, are now the second-largest source of revenue. Yet without reforms, dramatically higher taxes will be needed to pay for these programs.
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Taxes per Household Have Risen Dramatically
American households are sending more of their income to Washington, even with the 2001 and 2003 tax cuts. For 2008, the average household paid $21,616, well above the historical average of $16,334.
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The Top 10 Percent of Income Earners Paid 71 Percent of Federal Income Tax
The U.S. tax system is highly progressive. The top 1 percent of income earners paid 40 percent of all federal income taxes in 2006, while the bottom 50 percent paid 3 percent. Further, 32 percent of all tax returns with positive adjusted gross income, 43 million total, filed in 2006 were from people who paid no federal income tax at all.
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Total Tax Burden Is Rising to Highest Level in History
Under current law, tax revenues are expected to leap to 25.5 percent of the economy by 2082. Under President Obama's plan, tax revenues would remain consistently above the historical average of 18.4 percent of GDP. Both scenarios envision tax revenues higher than under current policy projections which patch the AMT and extend many of the 2001 and 2003 tax cuts.
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