NCPA - National Center for Policy Analysis

Taxes The Biggest (Unreported) Portion Of CPI

November 21, 2000

While energy, food and housing have all gone up, the fastest-rising element in our cost of living is never mentioned: our tax bill. Taxes are not mentioned in monthly Consumer Price Index announcements from the Bureau of Labor Statistics.

  • Medical expenses are 10.8 percent of income of the median two-earner family, according to the Tax Foundation.
  • Transportation accounts for 6.9 percent, clothing 3.9 percent, and food 8.9 percent.
  • Federal taxes, meanwhile, (including income, employment and other) consume 25.9 percent, while state and local taxes eat up 13.1 percent.
  • That means that for a median two-earner family, taxes take 39 percent of income.

Whether one compares the periods 1955 to 1975, 1975 to 1995 or 1995 to 1998, the total burden of federal taxes for the median family has risen faster than the Consumer Price Index, and, more important, faster than income. While the income tax burden has basically kept pace with the rise in income over the last 43 years, the rise in the employment tax has been much faster than the increase in income or inflation.

The BLS stopped reporting the tax information several years ago, saying it was too expensive to do so.

Source: Scott Burns, "CPI Curiously Ignores Effect of Rising Taxes," Dallas Morning News, November 19, 2000.


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