Total federal tax revenues as a percent of Gross National Product (GNP) have changed little since the end of the Korean War. In fiscal year 1954, for example, they were 18.9 percent of GNP, and in fiscal 1991, 19.4 percent. But the makeup of that revenue has shifted dramatically. Social Security tax revenues, only 2 percent of GNP in 1954, had risen to 7.2 percent in 1991.

• In 1954, the Social Security tax was 2 percent for the employer and 2 percent for the employee; maximum taxable earnings were $3,600 for a maximum tax of $144 per worker.

• In 1994, the Social Security tax for employer and employee combined totals 12.4 percent on maximum taxable earnings of $60,000; the maximum tax is $7,514.40.

• Even when adjusted for inflation, this is an increase of more than 800 percent.

All low-income people and most middle-income people now pay more in Social Security and Medicare taxes than they do in federal income taxes. Although the employer nominally pays half of these taxes, most economists agree that the burden of the tax is on the employees. - David R. Henderson.

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