November 9, 2010

Taxes Are NOT at Historic Lows

One of my pet peeves that I've developed recently is hearing people talk about taxes being at "historic lows" or words to that effect.   I've seen bloggers and commenters on blogs make the statement at least a couple times within just this week.      Even the mainstream media also likes to talk about historically low taxes.   Washington Post : Americans' Tax Burden Near Historic Low  At least they qualified it with the word 'near'.

Taxes are definitely low right now compared to recent decades but taxes are not at historic lows.   

Lets look at taxes from several angles and see how the tax rates today compare to past.


1. Top Tax Rates
We can find the Historical Tax brackets from the Tax Foundation site.

Top marginal rate is 35% as of 2010.  Back in 1992 the top marginal rate was 31%.    Today's top tax rate is 4% higher than it was 18 years ago. 

Verdict : Top Marginal tax rate is Not at Historic Low


2.  Taxes as % of GDP

I talked before about the History of Federal Tax Receipts as % of GDP
I got that data from the Excel sheet with data for 1934 to 2015

Total tax receipts as % of GDP the low was 4.8% in 1934 and up to 14.8% in 2009  Not at Historic Low
Individual income taxes low of 0.7% in 1934, versus 6.4% in 2009 Not at Historic Low
Social insurance was at 0.1% in 1936 and 0.7% in 1937 then by 2009 it was 6.3%. Not at Historic Low


Verdict : Taxes as % of GDP are not at historic lows

3.  Average tax rates

The CBO has Effective tax rates from 1979 to 2007.

Total average federal tax rate: 2007 = 20.4% vs 2003 = 19.8%  Not at Historic Low

Average individual income tax rate: 2007 = 9.3% vs 2003 = 8.4%  Not at Historic Low


Average social insurance tax rate 2007 = 7.4% vs 1979 = 6.9% Not at Historic Low

Average corporate income tax rate 2007 = 3% vs 1982 = 1.4% Not at Historic Low

Average excise tax rate 2007 = 0.6% This IS the lowest since 1979


Verdict: Average taxes are not at historic low

4. Tax Freedom Day

Tax Freedom Day

Tax Freedom Day historically from 1900 to 2010

2010 = April 9th at 26.89%
1900 = Jan 22nd at 5.9%
1950 = March 7th at 24.6%



Verdict : Tax Freedom Day is Not at Historic Low

Lets sum up :

1. Top marginal rate = Not at Historic Low
2. Taxes as % of GDP = Not at Historic Low
3. Average tax rates = Not at Historic Low
4. Tax Freedom Day = Not at Historic Low

Bottom Line :   Taxes are Not at Historic Lows 

2 comments:

  1. Thanks for the info. I have seen the reports that taxes are at historical low and wondered about it. Seems like a lot of people are trying to say we NEED tax increases. And of course, I need an extra hole in my head...

    ReplyDelete
  2. Apparently you misread the articles. Taxes are at the lowest level in the past 50 years, not the lowest level ever. Tax rates for dividends and capital gains are at 15%, which has driven tax rates down significantly for the wealthiest Americans.

    ReplyDelete

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