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Wednesday, October 17, 2007

PGL: Composition of the Tax Bite

Since Greg Mankiw no longer allows comments (a sentiment I understand on those days when comments are particularly trying), we'll have to do it this way:

Composition of the Tax Bite, by pgl: Greg Mankiw should be congratulated as he provides a graph of personal current taxes that includes what we pay at the state and local level relative to GDP. It does not include deferred taxes but no one knows how these will be paid as George W. Bush just scoffs at this reality. It also does not include payroll taxes but that’s OK as long as we are not denying the Trust Fund reserves.

But I do have a complaint. It leaves the impression that we are paying a lot more now they we have ever paid except during the Clinton years. To be fair – Greg did not say that... But we should notice that Greg left off what I’d call business taxes. Since Greg was kind enough to cite his source – line 3 from table 3.1 found here - I’m defining business taxes to be the sums of lines 3 and 4. I’ve also graphed line 2 from the same table as total current tax receipts. Total taxes as a share of GDP are not higher than they’ve ever been. You see – we may be paying more in personal taxes but business taxes as a share of GDP have declined from their levels before 1981.

    Posted by on Wednesday, October 17, 2007 at 12:51 PM in Economics, Taxes | Permalink  TrackBack (0)  Comments (0)

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