NCPA - National Center for Policy Analysis


April 11, 2007

The Tax Foundation and Congress's Joint Committee on Taxation (JCT) have compiled some useful facts about the federal tax system -- just in time for tax filing season, says columnist Bruce Bartlett.

Here's a few things worth thinking about as taxpayers write their annual checks to Uncle Sam:

  • In 2005, the federal government took $2.4 trillion out of the pockets of the American people.
  • This is about the same size as the entire U.S. economy in 1959 in inflation-adjusted terms.
  • Only two other countries on earth have economies as large as our federal government: Germany and Japan -- and Germany just barely makes the cut.
  • China, which everyone is so alarmed about, has an economy significantly smaller than the U.S. federal government, with a gross domestic product (GDP) of $1.9 trillion -- about equal to what the United States raises just from taxes on individuals.

In addition, contrary to popular belief, the vast bulk of federal taxes are paid by the wealthy:

  • According to the JCT, 53.7 percent of all federal income taxes were paid by those with incomes over $200,000 in 2006.
  • Those with incomes between $100,000 and $200,000 paid 28.3 percent of all individual income taxes.
  • Consequently, those with incomes over $100,000 paid 82 percent of the total; they also paid 44.4 percent of all payroll taxes.

By contrast, says Bartlett:

  • Those with incomes below $40,000 paid no federal income taxes at all in the aggregate.
  • The positive liability for those who paid anything was more than offset by tax rebates from the Earned Income Tax Credit (EITC).
  • In total, the EITC put $41 billion into the pockets of low-income workers in 2005, 91 percent of it being paid to those with no income tax liability.

Source: Bruce Bartlett, "Tax Facts,", April 10, 2007.


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