Taxes At Record Levels -- Even With A Tax Cut
August 16, 1999
Even with the proposed $792 billion tax cut, which Bill Clinton has vowed to veto as too large, federal revenues will continue to be at record levels, and the budget will show a $2 trillion surplus.
During the entire postwar period prior to the Clinton presidency, federal revenues averaged 18.6 percent of gross domestic product (GDP).
- The highest percentage ever recorded before this administration was 20.8 percent in 1981, just before the Reagan tax cut took effect.
- The World War II peak was 19.9 percent in 1943 and the Korean War peak was just 19 percent in 1951, according to the Department of Commerce.
- In 1992, federal revenues consumed 19.2 percent of GDP.
In 1993, Clinton's first major act in office was a massive tax increase of about 0.7 percent of GDP, meaning that federal taxes are $62 billion higher this year because of it.
- According to a recent Treasury study, Clinton's was the second largest peacetime tax increase ever enacted; only the 1982 legislation was larger.
- As a result, federal revenues reached 21.7 percent of GDP in 1998 and have averaged 20.5 percent during his administration.
- Since 1995, federal revenues have been at their highest level in American history.
According to the Congressional Budget Office, receipts will stay above 21 percent of GDP unless taxes are cut. In fact, at 0.6 percent of GDP, the Republican tax cut is actually smaller than Clinton's 1993 tax increase. Even with the tax cut revenues will stay at record levels and average 20.7 percent of GDP over the next 10 years.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, August 16, 1999.
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