Federal Budget Issue: Do We Need an Energy Tax?

Policy Backgrounders | Taxes

No. 127
Friday, June 04, 1993
by Stephen Moore

Does America Need New Taxes?

Figure I - Clinton Administration Estimate of the Cost of the Energy Tax Per Family

The reason that America has a budget deficit is not that taxes are too low but that federal spending has exploded. Between 1980 and 1990, federal tax receipts doubled from $517 billion to $1,031 billion.46 Next year, federal tax receipts would equal $1.2 trillion even without an energy tax increase. The typical American family already pays $16,100 a year in federal, state and local taxes, up from $6,970 per family (in 1990 dollars) in 1950.47 Since few families get $16,000 worth of government services each year, there is little reason to believe that Americans are undertaxed.

The energy tax is the largest single tax proposal in the Clinton economic program. If Clinton's entire $300 billion tax program were approved, it would be the largest tax increase ever passed by an industrialized country, increasing the tax burden in the U.S. to a level higher than it has ever been in peacetime. [See Figure I.]

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