Like all good Democrats, President Joe Biden is pushing higher taxes. Fish gotta’ swim, right? With a tax bill languishing in Congress and many of President Trump’s tax cuts expiring next year, it’s a good time to examine the average American’s tax burden.

Are taxes too high? Ultimately, this is a political question, but metrics inform the answer.

Language and context can be decisive in this debate. An American Enterprise Institute paper by Pomerleau and Schneider highlights the language danger. They argue that simply extending the Trump tax cuts would be “a missed opportunity to make further pro-growth reforms,” which is true, “but would also add too much to the national debt,” which is fundamentally false.

AEI is described as conservative in the media, but it has assumed the famous Bob Dole role of tax collector for the welfare state. Allowing a tax cut to expire is a tax hike. The Trump tax cuts are current law and their extension prevents a massive tax hike. Failing to raise taxes does not add to the national debt. Spending more than taxes collected does add to the national debt.

Avoiding misleading language comes first. Providing context comes next. In fiscal 2023, the federal government collected $4.4 trillion in revenues. Was $4.4 trillion a lot?

Not when compared with federal spending, which vastly exceeded receipts. On the other hand, sound budgeting begins with knowing the income available to spend, not the wish list for spending.

What about historical comparisons? The simplest is just to compare across years: 2023 revenues exceeded the 2018 total by about a third. That’s a big jump in just five years.

A somewhat better but task-specific approach is to compare revenue collections to the economy through the tax-to-GDP ratio. The 2023 tax ratio was 16.5%, about the average over the last 20 years.

Comparing tax collections to GDP suggests the fiscal burden imposed on the economy. The trouble is “the economy” doesn’t pay taxes. Only people pay taxes. The difference is important because as the economy grows, the tax burden on people grows even if the tax-to-GDP ratio remains constant.

The best intertemporal metric of the personal tax burden requires adjusting for population and inflation. If the population and the tax burden each rise by 10% over some period, then all else held constant, the per capital tax burden doesn’t change. But if the tax burden rises faster, then the per capital tax burden rises.

The second adjustment is for inflation. Suppose the population is constant and that both total tax collections and the price level rise by 10% over some period. In this case, the per capital inflation-adjusted (real) tax burden is constant – taxes are steady. But if the tax burden rises faster than the rate of inflation, then the real tax burden rises.

In current dollars, the 2023 per capital federal tax burden was a bit above $13,000. After adjusting for inflation, the comparable 2018 figure was just under $12,000, meaning the real per capita tax burden rose almost 11% in just five years. The previous five years saw a similar percentage increase.

Even so, the 2023 figure was only the third highest in America’s history, topped only by the figures for 2021 and 2022.

All historical comparisons suffer in that they imply the former level was correct in some sense. Taxes are higher today, but were they appropriate yesterday or too low, or still too high and today’s level is even worse? There’s no analytically correct answer. Metrics can’t provide political judgment. Taxes seem pretty high to me.

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