Ranked: The Revenue Impact of U.S. Tax Bills
The United States is opening up its wallet and writing some serious checks under the Joe Biden administration. The American Jobs Plan and the American Families Plan are expected to cost a combined $3.2 trillion in total taxpayer dollars. For comparison, the federal government spent slightly more than $6.5 trillion across all of 2020.
In order to foot the bill, tax hikes will roll out for corporations and the ultra-wealthy.
A History of Tax Hikes
But how do these present tax hikes compare to those of the past?
When comparing the estimated increase in tax revenue as a percentage of GDP, the Biden tax hikes fall on par with the Revenue Act of 1951 under Harry Truman, for the greatest tax increases—1.5% of GDP.
Within both tax bills, corporate and high personal incomes were key targets. But while the Revenue Act of 1951 saw a 5% increase on corporate taxes, Biden tax hikes are pushing for a steeper 7% spike from 21% to 28%. Prior to the Trump administration, corporate taxes were at the 35% level.
Here’s how those corporate tax increases would compare amongst some OECD countries:
|OECD Country||Corporate Tax Rate|
Overall, tax increases in U.S. history appear to be fairly modest, as only three have ever generated revenue as high as 1% of GDP. The third biggest increase of all-time, the Revenue and Expenditure Control Act of 1968 under Lyndon B. Johnson, saw:
- Temporary 10% income tax surcharge on individuals through 1969
- Temporary 10% income tax surcharge on corporations through 1969
- Delayed scheduled reduction in telephone and automobile excise taxes
With the exception of WWII, federal spending and deficits as a percentage of GDP is already at unprecedented levels.
In fact, federal spending today is equivalent to 30% of GDP, and is estimated to be closer to 25% by the year 2030. Moreover, in raw dollars, total federal debt now stands at an unprecedented $28 trillion dollars.