Total tax burden on the average American and how has it changed over the years

Question

It is easy to find information on the average amount Americans pay in Federal taxes. It is little more difficult to find out state and local taxes. But we also have a plethora of other taxes, property taxes, sales taxes, and so on. We pay taxes to register our vehicles on the gas to fuel them. We pay taxes on our phone bills and other utilities.

Many localities have special taxes on hotels, restaurants, and car rentals. The concept being those taxes are more apt to be paid by visitors instead of residents that elect the officials that impose the tax.

New taxes seem to be invented every few years. As electric vehicles become more prevalent and they no longer pay gas taxes, several states want to impose a mileage tax on all vehicles.

Those of us that rent pay the property taxes on the units, but indirectly. We pay rent to the property owner, but the actual tax money comes out of our rent.

When you tax businesses, the cost of the tax is past on to the consumers. in most cases a business that has a 30% profit margin get a 5% tax increase, they seldom keep the prices the same and accept a lower profit margin, they raise their prices to keep the same profit margin.

I have heard that in the last 50 year the tax burden has approximately doubled.

However I cannot find any actual statistics on how high the tax burden is and on how much it has increased. Are there any reliable and relatively complete data set available?

Answer 1

Short Answer

I have heard that in the last 50 year the tax burden has approximately doubled.

This has certainly not been the case as a percentage of income.

This is also not true as a percentage of GDP. Nominal GDP has increased by 23-fold from 1970 to 2023, but a lot of that is simply due to inflation. Inflation adjusted GDP has increased by 4-fold from 1970 to 2023.

So, the actual inflation adjusted tax collections have increased by more than double in the last fifty years, but the burden as a percentage of income has not doubled in the last fifty years.

Total Tax Collections In The U.S. Over Time

This table from official government statistics via Wikipedia shows combined federal, state, and local tax collections from all sources in the U.S. as a percentage of GDP from the years 1792 to 2016.

(Source)

The same data from about 1950 from the St. Louis regional office of the Federal Reserve (at the same source) is as follows (note that the chart does not show the full range of possible values down to zero which makes it look more variable than it actually is):

Basically the same information (as a share of national income rather than GDP which are subtly different) from 1902 to 1992 in a prettier chart:

(Source)

The totals per the St. Louis Fed for state and local taxes only (not adjusted for inflation or GDP) since 1992 are:

(Source)

An International Comparison Over Time

An international comparison is here:

Breakdowns By Specific Types Of Taxes

At the federal level, the breakdown from the 1930s to 2009 by type of tax revenue is:

(Source)

At the state and local level, the change in tax collections since 1998 by type of tax revenue is:

(Source)

Total Tax Burdens Over Time By Income Percentile

The New York Times in an October 6, 2019 feature had a dynamic chart showing the total combined federal, state and local tax burden by income percentile from 1950 to the most recent available data.

In 1950, the median taxpayer paid an average of about 18% of their income in combined federal, state, and local taxes, while the rate for the top 400 taxpayers was about 70%. It looked like this:

In 1974, the tax burden looked like this and was about 30% for the median taxpayer and 56% for the top 400 taxpayers:

By the year 2018 (the last year for which data was available at the time), the tax burden looked like this and was about 26% for a median taxpayer and 22% for the top 400 taxpayers:

Thus, the total federal, state and local combined tax burdens on both the median taxpayer and the top 400 taxpayers has fallen in the last fifty years as a percentage of income.