Section 1: Federal Revenue
Current Federal Tax Receipts Near Historical Average Since World War II, tax receipts have averaged around 18 percent of the economy, or gross domestic product (GDP). Tax receipts were 18.5 percent of GDP in 2007, surpassing the 60-year average, and are estimated to decline to 17.6 percent in 2008 due to the slowing economy and tax rebates in the 2008 economic stimulus package.
Federal Government Tax Revenue Has Tripled Since 1965 Government revenue has soared by more than $1.75 trillion since 1965, in part because top marginal income, capital gains, and corporate tax rates were cut.
Corporate Income Tax Cuts Boost Federal Revenues The economy has boomed since the 2003 tax cuts, leading to the highest level of corporate tax receipts in over 20 years.
Social Insurance Taxes Now Account for 34 percent of All Revenues 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.
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 2007, the average household will pay $22,100, down from $23,151 in 2000 but much higher than $10,800 in 1965.
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 the second highest in history, even with the ’01 and ’03 tax cuts.
Social Insurance Tax Revenues Have Climbed Steadily Since 1968, social insurance tax rates, which include Medicare, Medicaid, and Social Security taxes, have been the second-highest portion of overall federal tax revenue. If social insurance taxes are raised even further, they could easily overtake income taxes as the greatest share of federal revenue.
