Federal Revenue at Lowest Share of G.D.P. Since 1950

By Catherine Rampell

Update | 3:05 p.m.

Federal revenue is at its lowest share of the economy since 1950, according to recent Congressional Budget Office data.

DESCRIPTIONSource: Congressional Budget Office, Tax Policy Center, Roberton Williams

Federal revenue comes primarily from taxes, including income, Social Security and excise taxes. This revenue total is projected to claim just 14.9 percent of gross domestic product in 2009. The last time federal revenue crept below 15 percent of G.D.P. was in 1950, when it fell to 14.4 percent. Since that time, federal revenue has averaged about 17.9 percent of the economy.

As Roberton Williams wrote on the TaxVox blog on Monday, federal revenue is especially low this year for three main reasons: tax cuts in this year’s economic stimulus, the collapse of the economy (which means people and companies earn less money, and therefore pay less in taxes), and the Bush tax cuts from earlier this decade.

The share of the economy taken up by tax revenue is projected to rise, though, in the coming decade (the faded portion in the graph above). These projections assume that the overall economy picks up, and that some portion of the Bush tax cuts are allowed to expire, as they would under current law.

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bill-tb October 20, 2009 · 7:38 pm

Interesting recovery starting in 2010 … what are the odds.

Joe Values October 21, 2009 · 2:32 am

This is why Mr. Gaitner walks a fine tightrope, as our government prints more money to fund all of the “crisises”
and the value of the dollar declines, getting investors i.e. foreign investors still interested in our debt, at low rates of return, without sparking inflation. Inflation and credit worthiness, become the two major forces that will cause our economy to fal off the rope. As tax revenue is down, the funding of all of this printing, undermines the credit worthiness. Hence the forces of unbalance are pulling greater on our economy.

kevinearick October 21, 2009 · 9:46 pm

Quite an interesting year, 1950.

Our predecessors carve out a 55% economic return on labor, to rebalance the fulcrum, and, after 20 years of failure to effectively address the last demographic bank ponzi scheme, the economy takes off.

Now, the return on labor is back below 25%, after the following generations first sold themselves back to the banks, and then their children.

No middle class, no taxes.