About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


The Level of Taxes in the United States, 1940-2003 , Record No.: RS20087, Date: July 6, 2004 1 (July 6, 2004)

handle is hein.tera/crstax0513 and id is 1 raw text is: Order Code RS20087 Updated July 6, 2004 CRS Report for Congress Received through the CRS Web The Level of Taxes in the United States, 1940-2003 David L. Brumbaugh Specialist in Public Finance Government and Finance Division Don C. Richards Analyst in Public Finance Government and Finance Division Summary After reaching a post-World War II peak of 20.9% in fiscal year (FY) 2000, federal receipts as a percentage of Gross Domestic Product (GDP) have fallen for three consecutive years, declining to 19.8% of GDP in FY2001, 17.9% in FY2002, and 16.5% in FY2003. The decline in receipts has been attributed to a variety of factors: slower economic growth; changes in the make-up of aggregate income; and enacted tax-cut legislation. However, compared to the size of the U.S. economy, the overall level of federal taxes has remained relatively stable, remaining within 3.5 percentage points of GDP from post-war average. At the same time, the composition of federal taxes has changed somewhat, generally shifting away from corporate income taxes and excise taxes towards Social Security taxes. This report will be updated as additional data become available. For more information on the level of taxes, see CRS Issue Brief IB 10110, Major Tax Issues in the 108 Congress. The Level of Taxes Compared to the Size of the Economy Compared to the size of the U.S. economy, the overall level of federal taxes has remained relatively stable for the past five and one-half decades. Figure 1 shows federal receipts as a percentage of Gross Domestic Product (GDP) over the period 1940-2003; Table 1 presents the corresponding data.' The numbers indicate that during World War II, taxes increased from a pre-war level of about 7% of GDP to 20.4% in 1945. While tax receipts declined immediately after the war, they remained substantially above their pre- war level. The receipts reported in Figure 1 and Table 1 include a small quantity of non-tax items in the other category. However, non-tax items comprise such a small portion of the total that given this report's level of generality, we use the terms taxes and receipts interchangeably. Congressional Research Service * The Library of Congress