Tax Revenues Do Not Correlate Well with Tax Rates

2011, Top Statutory Rate President's Top Tax Rate0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

35.0%39.6%

2.0%

2.3%0.9%

Nondeductible Medicare Tax Medicare tax on wages/salaryPEP/Pease provisions reinstated,2011 Expiration of 2001/2003 tax rates,2011

TOTAL = 44.8%

PRESIDENT’S TAX HIKES

SOURCE: IRS, PRESIDENT’S FY2012 BUDGET, HOUSE BUDGET COMMITTEE ESTIMATES

CHART 1

Bottom 50% Top 1% Top 5% Top 25% Top 50%0%

20%

40%

60%

80%

100%

120%Before Tax ReliefAfter Tax Relief

SOURCE: IRS

TAX CODE MORE PROGRESSIVE AFTER TAX RELIEFBREAKDOWN OF TAX BURDEN BY INCOME LEVEL – 2001 VS 2008

CHART 2

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

TOP INCOME TAX BRACKET

TOTAL TAX REVENUE AS PERCENT OF GDP

INCOME TAX REVENUE AS PERCENT OF GDP

TAX REVENUES DO NOT CORRELATE WELL WITH TAX RATES

FISCAL YEAR

CHART 3

SOURCE: HERITAGE FOUNDATION

TAX REVENUES ARE HIGHLY CORRELATED WITH GDP

REAL 2006 GDP ($BILLIONS)

REAL 2006 TAX REVENUES ($BILLIONS)

1950 1960 1970 1980 1990 2000

$3,500

$7,000

$10,500

$14,000

$500

$1,000

$1,500

$2,000

$2,500REAL TAX REVENUE

REAL GDP

CHART 4

SOURCE: HERITAGE FOUNDATION

Lowest Individual Rate Middle Individual Rate Top/Corporate Tax Rate0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10%

25%

35%

19%

47%

66%

25%

63%

88%

200820502081

SOURCE: CBO

CHASING HIGHER SPENDING WITH TAXES(INCREASE IN TAX RATES NECESSARY TO KEEP PACE SPENDING)

CHART 5

1947 1955 1963 1971 1979 1987 1995 2003 2011 2019 2027 2035 2043 2051 2059 2067 2075 208310

20

30

40

50

60

70

80

Spending Tax Revenue

Ch WE ARE IN A SPENDING-DRIVEN DEBT CRISISHISTORIC/PROJECTED SPENDING & REVENUE AS A PERCENTAGE OF THE ECONOMY

SOURCE: OFFICE OF MANAGEMENT AND BUDGET HISTORIC TABLES, CONGRESSIONAL BUDGET OFFICE; PROJECTIONS BASED ON THE CBO’S ALTERNATIVE FISCAL SCENARIO.

CHART 6

Japan U.S. France Spain Italy U.K. Poland Ireland%

5%

10%

15%

20%

25%

30%

35%

40%

45%

SOURCE: ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOP-MENT

CORPORATE INCOME TAX RATESCHART 7

bottom 20% second middle fourth top 20% top 1%$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

WHO BENEFITS FROM TAX LOOPHOLESAVERAGE PER PERSON BENEFIT BY CATEGORY OF EARNERS

SOURCE: TAX POLICY CENTER/IRS

CHART 8

1970 1978 1986 1994 2002 2010 2018 2026 2034 2042 2050 2058 2066 20740%

5%

10%

15%

20%

25%

Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Social Security Medicaid & Other

HealthMedicaid & Other






































Health

Medicaid & Other Health








































































Medicare

Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare Medicare

PROJECTED TAX REVENUE

SOURCE: CBO

WHAT DRIVES OUR DEBT?(GOVERNMENT SPENDING AS SHARE OF ECONOMY)

CHART 9

CHART 10

Documents

Tax Revenues Do Not Correlate Well with Tax Rates