Order Code RS20087
Updated July 6, 2004
CRS Report for Congress
Received through the CRS Web
The Level of Taxes in the United States,
1940-2003
David L. Brumbaugh
Specialist in Public Finance
Government and Finance Division
Don C. Richards
Analyst in Public Finance
Government and Finance Division
Summary
After reaching a post-World War II peak of 20.9% in fiscal year (FY) 2000, federal
receipts as a percentage of Gross Domestic Product (GDP) have fallen for three
consecutive years, declining to 19.8% of GDP in FY2001, 17.9% in FY2002, and 16.5%
in FY2003. The decline in receipts has been attributed to a variety of factors: slower
economic growth; changes in the make-up of aggregate income; and enacted tax-cut
legislation. However, compared to the size of the U.S. economy, the overall level of
federal taxes has remained relatively stable, remaining within 3.5 percentage points of
GDP from post-war average. At the same time, the composition of federal taxes has
changed somewhat, generally shifting away from corporate income taxes and excise
taxes towards Social Security taxes. This report will be updated as additional data
become available. For more information on the level of taxes, see CRS Issue Brief
IB10110, Major Tax Issues in the 108th Congress.
The Level of Taxes Compared to the Size of the Economy
Compared to the size of the U.S. economy, the overall level of federal taxes has
remained relatively stable for the past five and one-half decades. Figure 1 shows federal
receipts as a percentage of Gross Domestic Product (GDP) over the period 1940-2003;
Table 1 presents the corresponding data.1 The numbers indicate that during World War
II, taxes increased from a pre-war level of about 7% of GDP to 20.4% in 1945. While tax
receipts declined immediately after the war, they remained substantially above their pre-
war level.
1 The receipts reported in Figure 1 and Table 1 include a small quantity of non-tax items in the
“other” category. However, non-tax items comprise such a small portion of the total that given
this report’s level of generality, we use the terms “taxes” and “receipts” interchangeably.
Congressional Research Service ˜ The Library of Congress

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CRS-2
Figure 1. Federal Receipts as a Percentage of GDP, Fiscal Years 1940 - 2003
2 5
2 0
E xcise Ta xes
O th er
1 5
So cial Insur ance and R etirem e nt R eceipts
1 0
C orpor ate Incom e T ax es
5
Ind ividu al Incom e Tax es
0
1 94 7
1 96 1
1 97 5
1 98 9
1 94 0
1 95 4
1 96 8
1 98 2
1 99 6
F isc al Y e ar

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CRS-3
Table 1. Federal Receipts as a Percentage of GDP, FY1940-FY2003
Social
Individual
Corporate
Excise
Total
Fiscal Year
Security
Other
Income Taxes Income Taxes
Taxes
Receipts
Taxes
1940
0.9
1.2
1.8
2.0
0.7
6.8
1941
1.2
1.9
1.7
2.2
0.7
7.6
1942
2.3
3.3
1.7
2.4
0.6
10.1
1943
3.6
5.3
1.7
2.3
0.4
13.3
1944
9.4
7.1
1.7
2.3
0.5
20.9
1945
8.3
7.2
1.6
2.8
0.5
20.4
1946
7.2
5.3
1.4
3.1
0.5
17.6
1947
7.6
3.7
1.5
3.1
0.6
16.4
1948
7.5
3.8
1.5
2.9
0.6
16.2
1949
5.7
4.1
1.4
2.8
0.5
14.5
1950
5.8
3.8
1.6
2.8
0.5
14.4
1951
6.7
4.4
1.8
2.7
0.5
16.1
1952
8.0
6.1
1.8
2.5
0.5
19.0
1953
8.0
5.7
1.8
2.6
0.5
18.6
1954
7.8
5.6
1.9
2.6
0.5
18.4
1955
7.3
4.5
2.0
2.3
0.5
16.6
1956
7.5
4.9
2.2
2.3
0.5
17.4
1957
7.9
4.7
2.2
2.3
0.6
17.7
1958
7.5
4.4
2.4
2.3
0.6
17.3
1959
7.5
3.5
2.4
2.1
0.6
16.1
1960
7.8
4.1
2.8
2.3
0.8
17.8
1961
7.8
3.9
3.1
2.2
0.7
17.7
1962
8.0
3.6
3.0
2.2
0.7
17.5
1963
7.9
3.6
3.3
2.2
0.7
17.8
1964
7.6
3.7
3.4
2.1
0.7
17.6
1965
7.1
3.7
3.2
2.1
0.8
17.0
1966
7.4
4.0
3.4
1.7
0.9
17.3
1967
7.6
4.2
4.0
1.7
0.9
18.3
1968
7.9
3.3
3.9
1.6
0.9
17.6
1969
9.2
3.9
4.1
1.6
0.9
19.7
1970
8.9
3.2
4.4
1.6
0.9
19.0
1971
8.0
2.5
4.4
1.5
0.9
17.3
1972
8.0
2.7
4.4
1.3
1.0
17.5
1973
7.9
2.8
4.8
1.2
0.9
17.6
1974
8.2
2.7
5.2
1.2
1.0
18.3
1975
7.8
2.6
5.4
1.1
1.0
17.9
1976
7.6
2.4
5.2
1.0
1.0
17.2
TQ
8.5
1.9
5.5
1.0
0.9
17.9
1977
8.0
2.8
5.4
0.9
1.0
18.0
1978
8.2
2.7
5.5
0.8
0.9
18.0
1979
8.7
2.6
5.5
0.7
0.9
18.5
1980
8.9
2.4
5.8
0.9
1.0
18.9
1981
9.3
2.0
6.0
1.3
0.9
19.6
1982
9.2
1.5
6.2
1.1
1.0
19.1
1983
8.4
1.1
6.1
1.0
0.9
17.5
1984
7.8
1.5
6.2
1.0
0.9
17.4
1985
8.1
1.5
6.4
0.9
0.9
17.7

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CRS-4
Social
Individual
Corporate
Excise
Total
Fiscal Year
Security
Other
Income Taxes Income Taxes
Taxes
Receipts
Taxes
1986
7.9
1.4
6.5
0.7
0.9
17.5
1987
8.4
1.8
6.5
0.7
0.9
18.4
1988
8.0
1.9
6.7
0.7
0.9
18.1
1989
8.2
1.9
6.6
0.6
0.9
18.3
1990
8.1
1.6
6.6
0.6
1.0
18.0
1991
7.9
1.7
6.7
0.7
0.9
17.8
1992
7.7
1.6
6.7
0.7
0.9
17.5
1993
7.8
1.8
6.5
0.7
0.8
17.6
1994
7.8
2.0
6.6
0.8
0.8
18.1
1995
8.1
2.1
6.6
0.8
0.9
18.5
1996
8.5
2.2
6.6
0.7
0.8
18.9
1997
9.0
2.2
6.6
0.7
0.8
19.3
1998
9.6
2.2
6.6
0.7
0.9
20.0
1999
9.6
2.0
6.7
0.8
0.9
20.0
2000
10.3
2.1
6.7
0.7
0.9
20.9
2001
9.9
1.5
6.9
0.7
0.9
19.8
2002
8.3
1.4
6.8
0.6
0.8
17.9
2003
7.3
1.2
6.6
0.6
0.7
16.5
Source: Office of Management and Budget., Budget of the United States Government, FY2005. Historical Tables.
For the next 5 decades, the level of taxes remained quite stable. The average for the
post-World War II period has been 17.9% of GDP. The lowest level was in 1950, at
14.4%; receipts reached their highest level as a percentage of GDP in 2000 at 20.9%
before falling to 19.8% in 2001,17.9% in 2002, and 16.5% in 2003. These high and low
points are relatively small departures from the average, and most years remained quite
close to the norm, within 3.5% of GDP from the long-term average. The narrow range
of variation has been a consequence of both economic factors and conscious policy
decisions. For example, inflation helped push revenues, as a percentage of the economy,
to a relative peak in 1981, while the Economic Recovery Tax Act of 1981 subsequently
reduced them. Similarly, robust economic growth helped boost receipts to their record
level in 2000, while the subsequent tax cut bills and decline in economic growth reduced
receipts in the next 3 years.
Composition of Federal Receipts
Figure 2 shows how the composition of federal receipts has changed since World
War II; it presents the percentage of federal receipts contributed by each major category
of taxes. Over the past five and one-half decades, corporate taxes and excise taxes have
declined in importance, while social insurance taxes (chiefly Social Security) have grown
substantially. Currently, the individual income tax still produces the most revenue and
is followed in size by social insurance taxes.
The supporting data for Figure 2 are not provided here, but can be found in table 2.2
of the Historical Tables volume of the set of FY2005 budget documents released by the
Executive Office of the President.

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CRS-5
Figure 2. Composition of Federal Receipts, Fiscal Years 1940-2003
State and Local Taxes
Figure 3 shows that state and local taxes have almost doubled, rising from 5.3% of
GDP in 1947 to 10.6% in 2003. As a result, total taxes — federal, and state and local
taxes combined — have grown by 5.1 percentage points, or by over a quarter of the 1947
level. (As with Figure 2, the supporting data for Figure 3 can be found in the Historical
Tables of the FY2005 budget — in this case, table 15.1 on page 288.) Note that the state
and local receipts shown in the figure do not include federal grants.

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CRS-6
Figure 3. Federal and State and Local Taxes as a Percentage of
GDP, Fiscal Years 1947-2003

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