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Some Charts for Tax Day

By: Andrew Lundeen

Where do federal government taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. dollars come from? In 2013, the largest share of revenue came from individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. es and payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. es, accounting for $2.26 trillion in total. The smallest share came from estate and gift taxA gift tax is a tax on the transfer of property by a living individual, without payment or a valuable exchange in return. The donor, not the recipient of the gift, is typically liable for the tax. es at $19 billion.

This has changed significantly over time. In 1940, excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. es were the largest source of federal revenue. Today, excise taxes account for about 3 percent of federal revenue and individual income taxes are the largest single source of revenue.

What the federal government buys with your tax dollars has also changed over time. In 1962, the largest federal expenditure was defense spending at 49 percent of the budget. Today, spending on health (27 percent) and Social Security (23 percent) make up the largest segments of government spending.

The progressivity of our tax code has also changed over time. Since the mid-1980s, the share of income taxes paid by the top 10 percent of taxpayers by income has gone from 54.7 percent to 70.6 percent while the share of taxes paid by the bottom 90 percent of taxpayers has gone from 45.3 percent to 29.4 percent.

The progressivity of the tax code is still prevalent when you consider income, with high-earners pay a large share of federal income taxes. For example, taxpayers who make over $200,000 a year earn about 28 percent of the all income, but they pay about 55 percent of all income taxes.

The composition of taxpayers has also changed overtime. In 1960, a large majority of tax returns came from married filers. Today, 62 percent of tax returns come from single filers with the remaining 38 percent coming from married filers.