Yes Virginia, sooner or later we will all be paying more taxes

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Wizbang:

Yes Virginia, sooner or later we will all be paying more taxes

 

December 28, 2012 | Filed under Big government,Categories,Economics | Posted by Michael Laprarie

My previous post dealt with two “surprise” taxes buried in the new Affordable Care Act regulations. And for the past year, observers have been listing the plethora of new taxes scheduled to take affect in 2013, fiscal cliff or no fiscal cliff.

But that isn’t the whole story. Far from it, in fact.

All that you need in order to understand what I’m about to explain, is a little math.

Ready?

Since the end of WWII, total annual Federal tax revenues have stayed at around 18% – 19% of annual GDP. That includes the years where the top marginal income tax rate exceeded 90% of adjusted gross income. During the same period, the Federal government has spent an average of 18% – 20% of annual GDP. This includes both the Cold War years, where defense spending alone often exceeded 10% of annual GDP, and the post-Great Society years, where entitlement spending routinely exceeded 50% of the total Federal budget.

The result was a rough balance between receipts and outlays, with a manageable annual deficit of around 1% – 2% of annual GDP. But the Obama Administration has significantly altered the former status quo. Federal tax revenue for 2012 is projected to be around $2.47 trillion, or roughly 17% of projected GDP. Meanwhile, Federal spending for 2012 comes in at around $3.7 trillion, or roughly 24% of projected GDP. The Obama Administration originally justified drastically increased spending as a remedy for the ailing post housing bubble economy. But the inflated spending of 2008 – 2009 has become the new budget baseline, with annual Federal government spending projected to rise to $4 trillion and beyond, in the next decade.