Skip to content

Who Pays Taxes and How Much

June 7, 2011

I’ve heard several things claimed about the US tax structure that I thought to figure some things out.  The first thing is to figure out how much in taxes do people actually pay.  I was able to look up the total historical US receipts from the White House(http://www.gpoaccess.gov/usbudget/fy10/hist.html table 1.1) and compare it to the GDP from the Bureau of Economic Analysis (http://www.bea.gov/national/index.htm#gdp).  If I can figure out how to show a graph I’ll do so but otherwise the table would have to suffice.

Figures are in Billions of Dollars

Year Reciepts GDP Ratio
1929 3.9 103.6 3.7%
1930 4.1 91.2 4.4%
1931 3.1 76.5 4.1%
1932 1.9 58.7 3.3%
1933 2.0 56.4 3.5%
1934 3.0 66 4.5%
1935 3.6 73.3 4.9%
1936 3.9 83.8 4.7%
1937 5.4 91.9 5.9%
1938 6.8 86.1 7.8%
1939 6.3 92.2 6.8%
1940 6.5 101.4 6.5%
1941 8.7 126.7 6.9%
1942 14.6 161.9 9.0%
1943 24.0 198.6 12.1%
1944 43.7 219.8 19.9%
1945 45.2 223 20.3%
1946 39.3 222.2 17.7%
1947 38.5 244.1 15.8%
1948 41.6 269.1 15.4%
1949 39.4 267.2 14.8%
1950 39.4 293.7 13.4%
1951 51.6 339.3 15.2%
1952 66.2 358.3 18.5%
1953 69.6 379.3 18.4%
1954 69.7 380.4 18.3%
1955 65.5 414.7 15.8%
1956 74.6 437.4 17.1%
1957 80.0 461.1 17.3%
1958 79.6 467.2 17.0%
1959 79.2 506.6 15.6%
1960 92.5 526.4 17.6%
1961 94.4 544.8 17.3%
1962 99.7 585.7 17.0%
1963 106.6 617.8 17.2%
1964 112.6 663.6 17.0%
1965 116.8 719.1 16.2%
1966 130.8 787.7 16.6%
1967 148.8 832.4 17.9%
1968 153.0 909.8 16.8%
1969 186.9 984.4 19.0%
1970 192.8 1038.3 18.6%
1971 187.1 1126.8 16.6%
1972 207.3 1237.9 16.7%
1973 230.8 1382.3 16.7%
1974 263.2 1499.5 17.6%
1975 279.1 1637.7 17.0%
1976 298.1 1824.6 16.3%
1977 355.6 2030.1 17.5%
1978 399.6 2293.8 17.4%
1979 463.3 2562.2 18.1%
1980 517.1 2788.1 18.5%
1981 599.3 3126.8 19.2%
1982 617.8 3253.2 19.0%
1983 600.6 3534.6 17.0%
1984 666.5 3930.9 17.0%
1985 734.1 4217.5 17.4%
1986 769.2 4460.1 17.2%
1987 854.4 4736.4 18.0%
1988 909.3 5100.4 17.8%
1989 991.2 5482.1 18.1%
1990 1032.1 5800.5 17.8%
1991 1055.1 5992.1 17.6%
1992 1091.3 6342.3 17.2%
1993 1154.5 6667.4 17.3%
1994 1258.7 7085.2 17.8%
1995 1351.9 7414.7 18.2%
1996 1453.2 7838.5 18.5%
1997 1579.4 8332.4 19.0%
1998 1722.0 8793.5 19.6%
1999 1827.6 9353.5 19.5%
2000 2025.5 9951.5 20.4%
2001 1991.4 10286.2 19.4%
2002 1853.4 10642.3 17.4%
2003 1782.5 11142.1 16.0%
2004 1880.3 11867.8 15.8%
2005 2153.9 12638.4 17.0%
2006 2407.3 13398.9 18.0%
2007 2568.2 14061.8 18.3%
2008 2524.3 14369.1 17.6%
2009 2156.7 14119 15.3%
2010 2332.6 14660.4 15.9%

Tax Burden on the Economy

This is the total amount of money the US Federal Government takes in each year from all sources.  I would love to also have state and local level figures but I haven’t found a quick concise source for it.  From what I’ve learned the states take in (in total) about half of what the federal government takes in and that figure increased noticeably since the 1970’s.  The fit is for post 1944 figures and is am affine least squares fit.  For post 1944 numbers, the average receipt level as a share of GDP has been 17.4% with a standard deviation of 1.32%.  The slope for the affine fit is .00000466%/year which would give a variation over 67 years (1944 through 2010) of .000299% much less than the standard deviation indicating little overall trend since 1944.

It’s important to note that despite drastic changes in how receipts are collected that the total amount has been roughly between 15% and 20% of GDP since 1944 with noticeable variation during that time.  With the state contribution it is likely that over the past half century the total tax burden on the economy has risen from around 15 to 20% to about 27% over a half century.  Total tax levels have been relatively constant in the US since World War Two.  I also have no evidence of this but I suspect the post WWII taxation level when compared with the pre WWII taxation level to be due in large part to a large standing military.

The big takeaway of this is that the level of federal taxation is independent of the income tax structure or the top marginal rate.  This means that a change in structure in taxation only changes the distribution of money taxed and not the total amount.  Also note that the top marginal rate has gone down from 91% in the 1950’s to 35% in the 2000’s (http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213).  This would suggest a shifting burden away from the wealthy as being responsible for taxation.

I will throw two studies at you (http://ase.tufts.edu/gdae/pubs/wp/03-10-tax_incidence.pdf (note page 16) and http://elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf (note page 12)). That indicate that the tax structure in the US is almost completely proportional (a little on the progressive side) which is a significant change from a progressive tax structure of the past.

Advertisements

From → Economics

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: