Mon February 24, 2014
Four Decades Of Taxes And Spending, In 2 Graphs
Originally published on Tue March 4, 2014 10:45 am
In 1974, federal taxes were equal to about a sixth of the U.S. economy. In 2013, after decades of heated debate, federal taxes were equal to ... about a sixth of the economy.
In the early '70s, federal spending was about a fifth of the economy. The same was true in 2013.
Those figures bounced up and down as the economy went through boom and bust cycles. During the long boom of the '90s, when the economy was growing quickly and unemployment was very low, the government was collecting more taxes than usual and spending less, relative to the overall economy. During the great recession, the reverse was true on both counts, as jobs disappeared and more people qualified for safety net programs.
The composition of spending and taxes has shifted a bit over the decades. Spending on Medicaid and Medicare has grown, relative to the overall economy, while military spending has fallen in relative terms. Payroll taxes (which fund Medicare, as well as Social Security) have grown, while corporate taxes have fallen.
Still, when you compare taxes and spending today to taxes and spending 40 years ago, the similarities are more striking than the differences.