The GovMath Report

Background:

Each week, we hear arguments from both sides on whether Federal Taxation is up or down from a number of years ago.  The figures and argument can be justified by either side by selectively choosing how they define a “tax” and a “taxpayer”.  The “Do the Simple Math!” approach below gives us a clear macro answer to this question.  It is not perfect, as we still need to define what a “tax” and “taxpayer” is, but we are doing this in the most general definition of these terms, which is much harder to dispel.

I am ignoring state and local taxes in this simple version (but you can add in another $2.5T to the government spending number below to get an idea of where these numbers would take us).

Metrics:

Data Point: Total Federal Spending

Number: $3.518T

Description: 2009 Total Expenditures of the US Federal Government in 2009.  This figure goes higher by about $50B based on some estimates because of how the accounting is done, but we will use the low figure here.  We do not use “Federal Tax Receipts” for this metric, because any Federal spending is essentially a “tax” that has to be paid by the US populace, even though it is tough or impossible to accurately measure the direct impact to an individual taxpayer.  Largest examples not directly related to a taxpayer:

-Receipt:  Corporate Taxes (~8% of Government Receipts in 2009):  Results in lower wages and/or higher product prices to taxpayers.

-Expense:  Issuing Debt to Cover Deficit (~30% of Federal Spending in 2009):  Results in future expenditures for debt service and devalues US dollar to taxpayers.

Source: wikipedia.org

Data Point: Number of Taxpayers in the US

Number: 139.6M

Description: In 2008, this was the number of Americans who filed Federal Income Tax returns.  We can safely assume that the number did not increase significantly for 2009 data.

Source: taxfoundation.org

Data Point: Number of Filers who Paid $0 or Received Credit on Federal Income Tax Return

Number: 52M

Description: This is 2008 data and we can assume it hasn’t changed materially for 2009.  Most Americans don’t realize that 37% of US “taxpayers” pay zero federal income tax or get a credit back each year when filing.  This is expected to pass 50% for 2010 data.  In 2008, 63% of tax filers pay all of the federal income taxes.  But, the comment I always receive on this is that there are payroll and other federal taxes that are essentially a burden to all taxpayers whether they pay 0% in “income” taxes or not so they are still paying federal tax.  This is definitely true and ironically justifies the macro definition of “tax” I use above.  But, of this 37%, many are getting a substantial payment from the federal government for filing their taxes (EETC, etc.), others are getting social security payments, federal food stamps, etc.  In more advanced calculations I have completed around this metric, I show how almost 70% of the US population is a net financial burden on the federal government as they take more from the federal government than they put into it from a monetary perspective.  For the calculation here, I don’t consider these 52M people “taxpayers”.

Source: taxfoundation.org

Calculation:

Federal Taxation Burden per Taxpayer = Total Federal Spending / (Number of Taxpayers in US – Number of Filers who Paid $0 or Received Credit on Federal Income Tax Return)

$40,624 = $3.518T / (139.6M – 53M)

Conclusion:

If you pay any federal income taxes, on average your federal taxation burden is over $40k a year.  When compared with prior years (taxfoundation.org), this shows a significant increase almost every year for the “taxpayer”.  These numbers ARE Inflation adjusted (usinflationcalculator.com).

2010:  (projected):  $53,309

2009:  $$41,414

2008:  $33,487

2000:  $29,169

1990:  $23,324

1980:  $21,226