What has happened to this country financially?
Politicians increased spending over time to support programs currying favor with voters while using “progressive” taxation to ensure that most voters didn’t experience increased cost.
Numbers in this letter were derived from the Congressional Budget Office letter on 1979 through 2005 tax burdens available online at http://www.cbo.gov/ftpdocs/98xx/doc9884/12-23-EffectiveTaxRates_Letter.pdf and the table of U.S. population estimates available online at http://www.tsl.state.tx.us/ref/abouttx/census.html. Numbers not directly reported in those documents (i.e., calculated numbers) are reported to three significant figures. “Taxes” are all federal taxes; not just income taxes. Dollar figures are in inflation-adjusted terms (2005 dollars).
In 1979 the U.S. government spent $5,750 per capita and $15,900 per household (2005 dollars). By 2005 it spent $8,340 per capita and $21,600 per household. So there was a substantial increase.
How was that increase at least partially funded? Government collected $4,790 in taxes per capita and $13,350 per household in 1979 (2005 dollars) vs. $6,710 per capita and $17,400 per household in 2005. So, on average, taxes paid per unit population and/or household increased substantially. But they didn’t increase for most people. For most people, they decreased.
Let’s define households holding U.S. persons in the lowest 20 percent of income earners as the lower class, those holding persons in the middle 60 percent of income earners as the middle class and those holding persons in the upper 20 percent of income earners as the upper class.
In 1979, those in the upper class paid 56.4 percent of all federal taxes. In 2005, they paid 68.8 percent. Their average household tax liability, in 2005 dollars, went from $59,700 to $84,800.
Meanwhile, the average household tax liability of the lower class declined, in 2005 dollars, from $1,250 to $684, while that of the middle class declined from $9,620 to $9,020.
And the average household tax liabilities of the lower and middle classes didn’t decline because their household incomes declined. The average household income of the lower class, in 2005 dollars, went from $15,700 in 1979 to $15,900 in 2005, while that of the middle class went from $51,200 to $60,600. The upper-class average household income increased even more. It went from $129,000 in 2005 dollars in 1979 to $223,000 in 2005.
But that’s not the point.
The point is that it’s easy to support increases in government spending when you’re not paying for them. The majority of people in this country haven’t been asked to fund the increases, and that’s not a good thing.
If you can get lots of candy without having to pay for it, you’re going to want lots of candy because you have no appreciation for what it costs to buy it.
Sooner or later that’s going to cause problems.
environmental and public health consultant