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Who Pays The Government
About This Indicator
What Does This Chart Show?
The five main federal taxes as shares of their combined take: individual income tax, payroll contributions for Social Security, Medicare, and unemployment insurance, corporate income tax, customs duties, and excise taxes. Quarterly since 1959, from the Bureau of Economic Analysis.
What It Says
In 1959 the corporate income tax brought in about a quarter of this revenue and payroll tax about a sixth; payroll pulled ahead in 1966, when the new Medicare tax began and the Social Security tax rose. Part of the corporate decline is profit that moved to partnerships and S corporations, whose owners pay individual income tax on it.
Why Shares and Not Dollars?
In dollars all five are far larger than in 1959. As shares, the chart asks not how much is collected, but which taxes collect it. A wedge can thin while its dollars grow: many excise taxes are fixed amounts per gallon or pack, so their share shrinks as prices rise unless Congress raises them.
Key Idea
Each wedge names the tax the money came through, not who bears it. An employer pays part of the payroll tax, an importer pays the tariff, and a company pays the corporate tax, but each can pass the cost on through lower pay, higher prices, or smaller returns to its owners.
Source: BEA. Individual income, payroll, corporate income, customs, and excise receipts, from the tax series listed above.
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