POLICY BRIEF FROM AMERICANS FOR TAX REFORM

• Taxes Dominate the Family Budget. The typical American family pays more in total taxes than it spends on food, clothing, and shelter combined. That's over 38 percent for total taxes vs. 28 percent for food, clothing and housing. (Tax Foundation)
• Doubling. The Census Bureau reports that the average household pays $9,445 in federal income taxes alone - twice what it paid in 1985.
• My how times have changed. The average tax rate for the 437,036 individual returns filed for 1916 was 2.75 percent.
• Taxes & GDP. Federal taxes consume about 21 percent of national income, the highest proportion since World War II. Total taxes from all levels of government - federal state and local taxes - stands at a record 32 percent of national income.
• Family Taxes. The average family in 1998 worked 2 hours and 50 minutes of every eight hour workday to pay taxes. Most of that time, 1 hour and 55 minutes, was spent working to pay federal taxes.
• Tax Freedom Day. Tax Freedom Day, the day Americans stop working for the government and begin working for their families, fell on May 10 last year, the latest day ever. (In 1950, Tax Freedom Day was April 3).
• Thanks Bill. Over the course of President Clinton's administration, federal taxes grew by over 54 percent, from $1.154 trillion in 1993 to $1.784 trillion in 1999.
• Taxing Surpluses. Despite record tax overcharges, President Clinton's fiscal 2000 budget proposed a major net tax hike of $65 billion in increased taxes and user fees.
• Nowhere near holy. The federal tax code is made up of four huge volumes that are each thicker than the Bible, and the tax code is over 7 million words long.
• More Taxes = Less Freedom. Tax Freedom Day Is Latest Ever! Tax Freedom Day for the typical American taxpayer didn't arrive until May 7 in 1996 -- the latest date ever. This means he or she has to work from January 1 thru May 7 to earn enough to pay all federal, state and local taxes. (Tax Foundation).
• Government Takes A Bigger Bite. Tax Bite In The Eight-Hour Work Day Grows. The typical worker now toils nearly three hours out of an eight-hour workday just to pay taxes. In 1996, the tax bite in the typical 8-hour workday was 2 hours and 47 minutes. By comparison, in 1945, the tax bite in an 8-hour day was 1 hour and 59 minutes. (Tax Foundation).
• America Speaks. How Much Should Families Pay In Total Taxes? According to a recent Reader's Digest poll, the maximum tax burden Americans believe a family should pay is 25 percent. That's not just for federal income taxes, but taxes from all levels of government, including social security taxes, sales taxes, excise taxes, property taxes, etc. Unfortunately, the total tax burden on the typical American family is far greater than the desired 25 percent: it now stands at 38.2 percent. Click here for more details on MaxTax.
• Clinton's Taxing Policies. Tax Take Rises Under Clinton. In 1993, President Clinton levied the largest tax increase in history, including higher gasoline taxes, tax hikes on Social Security recipients, and steep income tax hikes on individuals and small business owners. This $241 billion tax hike also boosted the top marginal tax rate by as much as 14.5 percentage points from 31 percent to 45.5 percent. (Treasury Department; JEC; JCT).
• The Happiness Quotient. 1950s vs. Today. In the "Happy Days" of 1955, the median family paid 27.7 percent of its income in total taxes. By 1995 its total tax burden claimed 38.2 percent of income. In other words, the family that pays $21,320 in taxes today, would have paid just $7,046 back in 1955 after adjusting for inflation-a three-fold increase! (Census Bureau; Tax Foundation).
• The 19 Percent Truism. Federal Receipts Hover Around 19 percent of GDP. No matter how high tax rates have been set, historically, federal revenues oscillated closely around 19 percent of GDP. Regardless of whether the top marginal rate was 90, 70, 50, or 28 percent, revenues remained close to 19 percent of GDP. (JEC; OMB).
• Social Security Taxes Take Heavy Toll. While President Clinton claimed his tax hikes hit only "the wealthy," he ignores the huge tax increase he placed on the middle-income elderly. That's because he subjected 85 percent of Social Security benefits to federal income taxes for unmarried seniors earning more than $34,000 and married seniors with combined income of $44,000 or more (only $22,000 per person). These income levels were not even indexed for inflation, which means that each year more elderly Americans have their benefits taxed. Social Security taxes also levy a heavy burden on working families. More than half of working families now pay more in total Social Security payroll taxes than they pay in income taxes. That's because the total payroll tax rate has grown from just 2 percent in 1949 to 15.3 percent today. (Treasury Department; Department of HHS; Social Security Administration).
• The Real Returns On Capital Gains. Middle Class And Elderly Americans Would Benefit From Capital Gains Tax Cut. IRS tax return data show that more middle-income taxpayers and seniors stand to benefit from a capital gains tax cut than those at the upper end of the income scale. In fact, 56.9 percent of all tax returns reporting capital gains came from taxpayers with total incomes below $50,000 per year. Many middle- and lower-income elderly Americans depend on cashing in their capital gains as their source of retirement income. (IRS; JEC).
• The Diminished Dependent Deduction. Dependent Deduction Hasn't Kept Up With Inflation. The personal and dependent exemptions that totaled $600 in 1950 was $2,500 in 1995. Unfortunately, had then deductions merely kept pace with inflation, they would be more than $3,800 today. In other words, these exemptions have eroded by more than $5,200 for a family of four. (Treasury Department; JEC).