Download Federal Revenue & Spending Charts

Federal Revenue and Spending:
A Book of Charts
Rea Hederman, Michelle Muccio, and Alison Acosta Fraser
The Heritage Foundation
Federal Revenue
Total Federal Revenue as a Percentage of
GDP, 1945-2007*
Since World War II, tax receipts
have averaged around 18 percent
of GDP. Tax receipts in 2005
surpassed the 60-year average
and are set to rise in future years.
*2007 estimated figures
Federal Revenue, by Major Source, 1965-2007*
Government revenue soared by
more than $1.7 trillion since
1965, in part because top
marginal income, capital gains,
and corporate tax rates were cut.
*2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
Corporate Income Tax Receipts as a Share
of GDP, 1985-2006
The economy has boomed since
the 2003 tax cuts, leading to the
highest level of corporate tax
receipts in over 20 years.
Type of Taxes as a Percentage of Overall
Federal Revenue, 2006
Social insurance taxes sharply
increased over the past 25 years
because of a large hike in Social
Security and Medicare payroll
taxes. Yet without reforms,
higher social insurance taxes
will be needed to pay for
growing, entitlement costs.
Average Federal Revenue per Household,
by Administration
American households are
sending more of their income to
Washington even with the 2001
and 2003 tax cuts. For 2006, the
average household will pay
$20,664, down from $22,647 in
2000 but much higher than
$13,017 in 1965.
* Data are inflation-adjusted in 2006
dollars.
Average Federal Revenue per Household,
by Administration
The average American
household tax burden increased
steadily since 1965, rising 20
percent during the Clinton
Administration. Today's tax
burden remains higher than all
administrations except for
Clinton's, even with the recent
tax cuts.
* Data are inflation-adjusted in 2006
dollars.
Taxes and Tax Rates
Top Federal Individual Income Tax Rates
and Receipts, 1960-2007
The most dramatic decline in the
top individual income tax rate
occurred during the Reagan
Administration - it fell from 70
percent to 28 percent.
Top Federal Corporate Income Tax Rates
and Receipts, 1960-2007*
The top corporate tax rate, like
the top individual rate, was
reduced the most under
President Reagan, from 46
percent to 34 percent. Today,
with a combined federal and
state tax rate of 39 percent, it is
the highest corporate tax rate in
the developed world.
* 2007 estimated figures
Average Effective Federal Tax Rates on
Households by Income Rank, 1983 and 2004
The share of taxes paid by the
top 20 percent of income earners
increased by almost 5 percent
between 1983 and 2004, while
the share paid by the bottom 20
percent of income earners
decreased by almost 51 percent.
Percent of Federal Income Tax Paid in
2004, by Household Percentage Group
The top 1 percent of income
earners, by household, paid 37
percent of all federal income
taxes in 2003; the bottom 50
percent paid a little over 3
percent.
Federal Spending
Total Federal Spending, 1965-2007
estimate, with Congressional Leadership
Real annual federal spending
more than tripled since 1965 and
nearly doubled since 1980.
* Data are inflation-adjusted in 2006
dollars.
Percentage Growth of Federal Spending and
Inflation (CPI), 1992-2007*
Total nominal spending
increased over 2,000 percent
since 1965, while the Consumer
Price Index (CPI) increased a
relatively modest 500 percent.
Less than half of the increase in
federal spending came from
defense and homeland security
spending.
*2007 estimated figures
Data are not inflation-adjusted.
Total Federal Spending Per Household,
1965-2007 estimate
The Bush Administration has
presided over one of the sharpest
growths in spending per
household since the Johnson
Administration, when Great
Society programs were enacted.
* Data are inflation-adjusted in 2006
dollars.
Average Federal Spending per Household,
by Administration
Federal spending per household
soared by more than $8,000
between the administrations of
President John F. Kennedy and
President George W. Bush.
* Data are inflation-adjusted in 2006
dollars.
Total Federal Spending and Median
Income, 1965-2006
Federal spending increased 250
percent since 1965, five times
faster than median income,
which rose just over 40 percent.
* Data are inflation-adjusted in 2005
dollars.
Defense and Non-Defense Discretionary
Spending, 1965-2007*
Non-defense discretionary
spending increased almost
continuously -- a total of 190
percent since 1965 -- while
inflation-adjusted discretionary
defense spending fluctuated
widely.
* 2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
National Defense Spending, 1965-2007*
At 4 percent of GDP, defense
spending is one and a half
percentage points of GDP below
the 45-year historical average
and well below Cold War and
Vietnam War levels.
*2007 estimated figures
Total Discretionary Spending vs.
Mandatory Spending, 1965-2007*
Discretionary spending -- the
portion of the budget subject to
annual review and appropriation
-- has risen 112 percent since
1965. Mandatory spending,
consisting mostly of entitlements
not subject to annual review and
appropriation, has risen 603
percent since enactment of two
Great Society programs,
Medicare and Medicaid, in 1965.
*2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
Total Mandatory Spending, Excluding Net
Interest, 1965-2007*
Mandatory spending, which is
not subject to annual review and
appropriations, grew in inflationadjusted dollars from $204
billion in 1965 to $1.4 trillion in
2007.
* 2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
Mandatory Spending per Household, 19652007 estimate
Mandatory spending per
household increased over $8,514
since 1965, with 52 percent of
that increase occurring between
1965 and 1980.
Data are inflation-adjusted in 2006 dollars.
Total Federal and Combined State and Local
Spending per Household, 1965-2007*
The total spending burden on
American households grew 84
percent since 1965. State and
local spending per household
increased 103 percent, while
federal spending increased 74
percent.
* 2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
Budget Comparisons
Total Federal Tax Revenue and Spending,
1965-2007*
Since 1965, federal tax revenue
and spending soared, increasing
by over $1.7 trillion and almost
$2 trillion, respectively. The
government spent more than it
took in during the vast majority
of this period, generating an
average annual deficit of $230
billion from 1970-1997.
* 2007 estimated figures
Data are inflation-adjusted in 2006 dollars.
Change in Average Revenue and Spending,
by Administration
Spending growth typically
increases faster than revenue
growth, as seen in five of the last
eight administrations.
* Data are inflation-adjusted in 2006 dollars.
Average Federal Budget Surplus or Deficit
as a Percentage of GDP, by Administration
Since the 1960s, deficits driven
largely by increased levels of
spending have been the norm,
while surpluses were a transient
exception. The current 2006
deficit -- 1.9 percent of GDP -- is
slightly below the 45-year
historical average of 2.2 percent
of GDP.
Number of Presidential Vetoes, By
Administration
The last nine presidents have
used their veto power sparingly.
Number of Presidential Vetoes, By
Administration
President Reagan vetoed more
bills than any other president in
the past 40 years, while
President George W. Bush
vetoed only one bill despite over
100 veto threats.
Number of Pork Projects, 1991-2007
Earmarks, or "pork"projects,
proliferated in recent years.
There were more earmarks in
2005 than from 1991 to 1999
combined. However, the
dramatic decrease in pork
projects in 2007 is a result of the
moratorium on earmarks,
inserted in the legislation that
funded the remaining nine
appropriations bills for fiscal
2007.
Projected Spending
Debt Held By Public as a Percentage of
GDP, 1940-2007*
The current debt burden from
publicly held debt is almost 9
percentage points below the
historical average of 46 percent
of GDP. Debt from World War II
was not structural, and high
relative debt levels gradually
declined over the next 20 years.
*2007 estimated figures
Federal Spending as a Percentage of GDP
Using CBO Baseline, 2000-2050
Since the early 1960s, federal
spending historically consumed,
on average, around 20 percent of
GDP. However, the three big
entitlement programs -Medicare, Medicaid, and Social
Security -- are projected to
explode as baby boomers retire.
Even if "defense" spending and
"other" (non-defense
discretionary and small
entitlement) spending decline as
a share of GDP, rapid growth in
the three big entitlements will
cause the federal budget to reach
38 percent of GDP.
Federal Budget Deficit as a Percentage of
GDP, 1965-2050
If federal spending continues on
its current steep trajectory, the
budget deficit is projected to
grow 646 percent by 2050,
reaching 19 percent of GDP by
2050 -- well above the 45-year
historical average of 2.2 percent.
Structural deficits at this size -driven by entitlement spending
in Social Security, Medicare, and
Medicaid -- have never been
seen in the U.S. and illustrate the
need to reform these programs.
Federal Spending as a Percentage of GDP with
Constant Discretionary Spending, 2000-2050
If "defense" and "other"
spending are held constant at
current levels of GDP rather than
declining, total government
spending will reach 47 percent
of GDP by 2050.
Spending as a Percentage of GDP with
Constant Discretionary Spending, 2000-2050
Letting all the 2001 and 2003 tax
cuts expire will not solve the
spending imbalance.
Expenditures will reach 40
percent of GDP, while tax
revenues will soar to 24 percent
-- rates never sustained in the
U.S. before. Total federal
spending today consumes around
20 percent of GDP.
Federal Tax Revenues as a Percentage of
GDP, 1965-2050
Under current law, revenues are
expected to skyrocket to 24
percent of GDP. Extending the
tax cuts will shave less than 1
percentage point of GDP off this
burden. AMT and real bracket
creep are the biggest drivers of
this rising tax burden.
Spending on Three Entitlements as a
Percentage of GDP, 2005-2050
Pressure from entitlements,
fueled by demographic changes
and rising heath care costs, will
cause federal spending to
explode. Medicaid spending will
nearly triple -- increasing by 170
percent. Medicare will more than
triple -- increasing by 220
percent.
Federal Spending for Mandatory and
Discretionary Programs, 1965-2007*
Since enactment of Medicare
and Medicaid by President
Johnson in 1965, total
mandatory spending has
doubled. As baby boomers retire
and become eligible for Social
Security, Medicare, and
Medicaid, entitlements
eventually will crowd out all
other spending unless these
programs are changed.
*2007 estimated figures
Three Major Entitlements and Tax Revenues
as a Percentage of GDP, 1965-2050
Spending for the three major
entitlements -- Medicare,
Medicaid, and Social Security -will more than double by 2050.
At this rate and without major
reforms, entitlement spending is
set to consume all federal tax
revenues.