Federal Government Raking in Record Tax Revenue – So Who’s Paying?
Whether you believe the economy is good or bad, or if you approve of federal lawmakers’ policies, the fact remains the federal government is having a really good year when it comes to income. That’s because the 2015 fiscal year for the government is going to be a record-breaker. Through the first 11 months of their fiscal year, the Treasury Department had reported more than $2.88 trillion in revenue. Their fiscal year ends in September, which means the Treasury Department expects to finish off the year with more tax revenue than in any other previous year, ever. That figure leads to a few questions, such as: where is all that money coming from and who is paying most of it? Another logical question is: with revenue up is the country’s deficit finally going down?
Check Your Paycheck
Although there are millions of taxpayers, you might think that businesses still pay a large portion of the country’s taxes, since they earn a large portion of its income. However, the truth is, businesses continue to find ways to pay less and less of the county’s tax bill, which means the large majority of the Treasury Department’s income in 2015 is coming from you, the taxpayer. In fact, these days, businesses and corporations pay about 11 percent of the country’s entire tax bill. That means that most of that $2.67 trillion comes from personal taxes, such as income tax, capital gains tax and sales tax among others. That represent a significant shift from the early 1950s when corporate taxes were responsible for about 30 percent of all U.S. tax revenues.
Businesses Paying Less, Individuals Paying More
There are several possible reasons for this shift, but the largest factor is that corporations have become very smart in how they pay their taxes. By implementing creative tax strategies, including shifting their tax domiciles overseas, many businesses have found several effective ways to lower their tax bill. On the other hand, while corporations have found ways to reduce their tax bill, individual taxes now account for 47 percent of the total tax income in the country. It was 42 percent back in the early 1950s. There has been another huge change in taxes since the early 1950s and that’s the effect of Social Security. Those taxes used to account for less than 10 percent of the total tax bill. However, today they account for more than 30 percent.
Goes Out Faster Than it Comes in
Meanwhile, one might assume that with record revenue coming in that our country could actually start to pay down its debt. However, so far this year the government has overspent by $530 billion. So instead of putting that record revenue towards the country’s deficit, the government has spent more than it has coming in. You might wonder what the government is spending all that money on. According to the Treasury Department, most of the money is spent on Social Security and Medicare, a combined $1.31 trillion, with another large portion going towards national defense, $536 billion. The government has also already spent $235 billion to pay off interest owed on their debt. The bottom line is that while the federal government continues to collect record revenues from individual taxpayers and corporations, after expenditures they have nothing left over to show for it.