Federal Revenue and Spending: A Book of Charts

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Federal Revenue and SpendingA Book of Charts

• Rea Hederman, Michelle Muccio, and Alison Acosta
  Fraser
• The Heritage Foundation

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Federal Revenue
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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
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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.
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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.
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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.
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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.
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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.
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Taxes and Tax Rates
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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.
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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
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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.
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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.
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Federal Spending
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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Total Mandatory Spending, Excluding Net Interest,
1965-2007
Mandatory spending, which is not subject to
annual review and appropriations, grew in
inflation-adjusted dollars from 204 billion in
1965 to 1.4 trillion in 2007. 2007 estimated
figures Data are inflation-adjusted in 2006
dollars.
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Mandatory Spending per Household, 1965-2007
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.
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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.
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Budget Comparisons
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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.
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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.
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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.
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Number of Presidential Vetoes, By Administration
The last nine presidents have used their veto
power sparingly.
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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.
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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.
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Projected Spending
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.