New Report on Tax Burdens and Government Spending by Age Group
June 4, 2007
We’ve released a new report today exploring the distribution of federal, state and local tax burdens and government expenditures by age group in 2004. It’s a spin-off project from the larger fiscal incidence model we built back in March, and provides many new insights into the priorities of lawmakers and the impact of the nation’s fiscal system over the course of a lifetime. Here are some key findings:
• As the Baby Boom generation prepares to retire, lawmakers should be aware of the distribution of taxes and government spending across age groups.
• America’s youngest households aged 25 and under received $2.32 in government spending for each dollar of taxes paid in 2004. Middle-aged households aged 45 to 54 received $0.73 per tax dollar, and America’s oldest households aged 75 and over received $4.93 per dollar of taxes paid;
• As a group, households aged 35 to 64 pay more in taxes than they receive in government spending, while households under age 35 and over age 64 receive more government spending than they pay in taxes. Overall between $376 billion and $872 billion per year is fiscally transferred from middle-aged groups to the youngest and oldest Americans each year through government taxes and spending;
• Over a lifetime, government spending follows a U-shaped pattern, with large education and welfare spending in youth and large Social Security and Medicare payments in old age. But even within each age group, there are large differences in taxes and government spending across households at different income levels.