Federal, state and local taxes – including income, property, sales and other taxes – consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.
A great deal, really. But, as Rothschild notes:
Second, readers may walk away knowing that the US government costs much more than 9.2% of national income to operate, but figure that corporations or foreigners pay the rest. In other words, “we” pay 9.2%, “they” pay the rest. It’s an iron-clad rule of public finance that corporations don’t pay taxes, people pay taxes. All tax incidence ultimately rests on a person. If you tax a corporation’s profits, for instance, the people who pay are the owners of its shares, who are (ultimately) individuals.
Third of all, it’s important to get a sense of what state and local governments collect. In 2006, state governments collected over $710 billion in taxes, around 5.4% of GDP. When you include local governments, that figure goes to $1.24 trillion, or about 9.5% of GDP. In other words, in 2006, state and federal revenues were about to the percentage of personal income collected by all levels of government in taxes in 2009. That should give you a sense of how skewed this particular figure is. All levels of government in 2009 did not cost less than state and local governments in 2006.
In other words, in addition to collecting about a quarter of GDP in taxes, governments in the US at all levels tacked on another 10.7% of GDP in future costs. Add that up and governments in the US spent over a third of national income in 2009. A far cry from the 9.2% that the USA Today article inadvertently implies.
Read the whole thing here.
Also worth reading: David Kirby’s piece on young people’s attitudes toward the word “libertarian,” which can be found here.