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Fiscal Facts & Figures

  • Growth in Government
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  • International Comparisons
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  • Federal Taxes
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  • Federal Spending
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  • Bush Budget Charts
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    Growth in Government

    Total Federal Revenues, 1900-2004 (Percent of GDP)

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    Federal revenues, measured as a share of gross domestic product (GDP), have dropped from a peak in 2000 due to the economic slowdown and recent tax cuts. From the 1930s through the 1970s, taxes rose rapidly to finance a huge expansion in federal spending programs. After some modest tax relief during the 1980s, government revenues grew very quickly during the 1990s fueled by large tax increases in 1990 and 1993.

    Total Federal Revenues, Per-Capita, 1900-2003 (Constant 2003 dollars)

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    When federal revenues are measured on a constant-dollar (or inflation-adjusted) basis, the rapid rise in taxes during the 1990s becomes evident. Taxes peaked in 2000 at $7,784 per-capita, which was up 39 percent since 1990.

    Federal Taxes

    Federal Individual Income Taxes, 1980-2004 (Percent of GDP)

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    The increase in federal taxes during the 1990s was particularly dramatic for individual income taxes. Large tax rate increases in 1990 and 1993, a rise in capital gains realizations, and the effect of "real bracket creep" were the primary culprits. During years of strong economic growth, real bracket creep causes income taxes to rise faster than personal incomes because the steeply graduated federal tax rate structure automatically imposes higher average tax rates on millions of families every year.

    Average Federal Tax Rate by Income Group, 2001 (Includes Individual Income, Payroll, and Excise Taxes)

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    Households at different income levels pay very unequal portions of their income towards federal taxes. Households with incomes over $200,000 pay 27 percent of their income towards federal individual income, payroll, and excise taxes, on average. By comparison, middle-income households with incomes between $40,000 and $50,000 pay 17 percent of their income towards these federal taxes.

    Share of Federal Taxes Paid by Income Group, 2001 (Includes Individual Income, Payroll, and Excise Taxes)

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    Households with incomes above $200,000 pay 32 percent of all federal individual income, payroll, and excise taxes. Households with incomes between $100,000 and $200,000 pay 24 percent of these taxes.

    Share of Federal Individual Income Taxes Paid by Income Group, 2001

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    The highly graduated or "progressive" nature of the federal individual income tax results in a very small minority of Americans paying a massive share of the $1 trillion of annual income tax revenues. The highest-income 1 percent of households pay 34 percent of individual income taxes, and the top 5 percent of households pay 53 percent, based on the most recent IRS statistics.

    Share of Federal Income Taxes Paid by the Highest-Income One Percent of Taxpayers, 1980-2001

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    The federal income tax burden has been become increasingly skewed towards households with the highest incomes. The share of all individual income taxes paid by the highest-income 1 percent of households has increased from 19 percent in 1980 to 34 percent in 2001.

    Share of Households Paying Federal Income Tax by Income Group, 2002

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    There is sometimes concern expressed that wealthy families are routinely able to avoid income taxes through a variety of tax loopholes. Government statistics do not bear out this suspicion: Over 99 percent of households with incomes over $75,000 pay income tax. By contrast, a growing share of lower-income households pay no federal income taxes. In 2002, 37 percent of U.S. households, most earning less than $40,000, paid zero income taxes.

    Total Number of Pages of Federal Tax Rules

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    The federal individual income tax began relatively modestly in 1913 with 400 pages of rules and a basic rate of 1 percent. From the beginning, CCH Incorporated has published an annual collection of federal tax rules containing the tax code, tax regulations, and summaries of other federal tax pronouncements such as IRS letter rulings and technical advice memoranda. The number of pages in this publication has grown from 400 in 1913 to 54,846 in 2003.

    International Comparisons

    Top Personal Income Tax Rates, 1980-2001

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    Since the United States cut income tax rates in 1981 and 1986, dozens of other nations have followed suit with their own tax rate reductions. The average top individual income tax rate for 26 major contries in the OECD has been cut more than 20 percentage points since 1980.

    Top Corporate Income Tax Rates, 1996-2003

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    In parallel with personal income tax rate reductions, countries around the world have been reducing corporate income tax rates in recent years. The average corporate tax rate across 30 OECD countries has fallen from 37.6 percent in 1996 to 30.9 percent by 2003. The combined U.S. Federal and state rate is 40 percent.

    Federal Spending

    Federal Outlays as a Percent of GDP, 1960-2004

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    There has been a vast shift in federal spending priorities since the late 1960s when defense spending and non-defense spending, other than interest, were of about the same magnitude. Today, non-defense spending is four and one-half times larger than federal spending on defense. Both defense and nondefense spending are up sharply in the last couple of years.

    Average Annual Growth in Constant-Dollar Federal Spending

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    Overall federal spending growth slowed in the 1990s compared to prior decades, measured on a constant-dollar or after-inflation basis. The chart indicates that the cause of the slowdown was the dramatic drop in defense spending that occurred with the end of the Cold War. During the 1990s, constant-dollar non-defense spending grew 2.6 percent annually, faster than the 2.0 percent growth rate during the 1980s.

    Federal Outlays, 1990-2004

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    Discretionary (or annually appropriated) federal spending grew slowly during the mid-1990s, but has grown rapidly in recent years under President Bush. Mandatory (or entitlement) spending has grown strongly after a brief lull in the early 1990s. Mandatory spending will grow explosively when the baby boomers begin retiring in 2008.

    Federal Discretionary Outlays, 1990-2004

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    Defense spending fell until the mid-1990s when it began to expand once again. Nondefense discretionary spending has grown rapidly since a brief pause in the mid-1990s.

    Proposed Federal Discretionary Outlays for 2003

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    One way to see how discretionary spending has ballooned is to compare current estimates for FY2003 outlays to prior estimates of FY2003 outlays. Actual FY2003 outlays will be about $787 billion-that is a stunning $192 billion, or 32 percent, more than President Clinton’s $595 billion proposal for FY2003 in his FY1999 budget. There has been a pattern of constant upward revisions in out-year spending in both the defense and nondefense budget categories.

    Bush Budget Charts

    Federal Outlays under the Republican Congress, Percent of GDP

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    Annual Increase in Total Federal Outlays

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    Largest Annual Increases in Real Discretionary Outlays in the Last 40 Years

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    Real Discretionary Outlays: Defence and Nondefense

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    Cumulative Real Nondefense Spending Increases in First Four Years of Presidency

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    Discretionary vs. Mandatory Outlays, Annual Changes

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    Discretionary Outlays Proposed by the President vs. Actual Outlays

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    Growth in Outlays by Federal Department Under the Republicans, FY1995-FY2004

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