In response to a question that was asked in comments I’m preparing a chart of federal tax receipts as a proportion of personal income using data from the invaluable resource on economic data from the St. Louis Federal Reserve. Unfortunately, the tax receipts data and income data are reported rather differently so creating the chart isn’t as trivial as it might be.
Just as a taste of what you’ll see here’s a few sample data points:
| Date | Federal Receipts as proportion of personal income |
| 2000-01-01 | 24.45% |
| 2005-01-01 | 21.85% |
| 2011-01-01 | 19.17% |
The key point here is that whether you’re measuring tax receipts against GDP or against personal income they really are at historic lows. This is true at every income quintile, by the way.
I think there are reasonable arguments about what proportion of our incomes should be consumed by taxes, how much we should be borrowing, what the federal government should or should not do, and how to dig the economy out of the pit that it’s in. We shouldn’t be arguing about whether tax burdens have risen or fallen. By virtually any reasonable measure tax burdens have fallen. This has happened while federal spending has increased and that’s why we’re in the fiscal mess we’re in right now.
Update
A couple of more points I should make. It is not true that federal tax receipts have fallen because personal income has fallen because personal income has not fallen. It’s actually risen a little. FICA receipts have fallen off due to the large number of job cuts.
And that we genuinely need to increase tax receipts does not necessarily specify how we should do that. It can be by increasing marginal rates, by eliminating deductions (lowering “tax expenditures”), or by creating a new tax.
There’s also this CBO data (excel file), which I’ve linked to several times here and over at OTB.
Dave –
Unlike many bloggers or commenters, whether you and I agree on a topic or not, I find you to be absolutely intellectually honest in your analyses and completely earnest in your views.
And, as I’ve posted before, anyone who is using taxes to GDP ratios is either just flat damned ignorant, or intellectually dishonest and with an agenda. You do not make that error.
First point: So, I come to your stats, comparing taxes to personal income. The “taxes are at an all time low” riff started with a guy comparing 1950 to today. I note that in your data set we have 2000 at 24.5%. Hard to imagine that’s not dot.com influenced. We have 2011 at 19.2%. Hard to imagine that’s not recession influenced.
Everyone looks at data differently, so I have my view. But looking at the data as you are, what are the ratios, as you see it, in 1950, 1955, 1960, 1965, 1970 ……………2010?? I’ve seen what I consider a credible data set. And the notion that taxes are “at historical lows” just simply does not stand up.
Second point: By any accounting, the tax burden has become more and more progressive, even after shirking off the usual dishonest dodge about payroll taxes. In fact, our illustrious President has a standard stump speech: “only 3% of the taxpayers will be affected…….etc” Does it not become immoral, if not contemptable, that we pursue a policy of theft through the tax code, as opposed to theft at the end of a gun, just because it is politically feasible? And the morals aside, any quantitative position on exactly what maximum fraction of income is owed to the state, and why?
Drew,
See the CBO data I’ve posted above for you many times. It goes back to 1979 and is broken out by quintile as well as top 10%, 5% and 1%. The first-fourth quintiles have all seen substantial reductions. The highest quintile has fluctuated in a pretty narrow range. The very top earners show more volatility in a somewhat wider range.
“Historic lows” largely depend on what group and particular circumstance one is talking about.