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May 31, 2017

Per Capita Taxes Have More Than Doubled Since JFK

Real federal taxes per capita have more than doubled since John F. Kennedy served as president — and argued for lower taxes.

Real federal taxes per capita have more than doubled since John F. Kennedy served as president — and argued for lower taxes.

In 1961, the fiscal year Kennedy was elected, the federal government collected about $94.388 billion in taxes, according to the Office of Management and Budget. The population that year was about 183,691,481, according to the Census Bureau. That meant federal tax revenues equaled about $514 per capita — or $4,121 in 2016 dollars.

By 1965, the fiscal year Lyndon Johnson beat Barry Goldwater, the federal government collected about $116.817 billion in taxes from a population of about 194,302,963. That year federal taxes equaled about $601 per capita — or $4,578 in 2016 dollars.

In fiscal 2016, according to OMB, the federal government collected about $3.268 trillion in taxes. That equaled about $10,114 for each of the 323,127,513 people in the country.

Per capita federal taxation in fiscal 2016 was 121 percent more than it was in 1965 and 145 percent more than it was in 1961.

In 1961, when Kennedy took office, federal taxes consumed 17.2 percent of gross domestic product, according to OMB. By 1965, they were down to 16.4 percent.

In 2012, then President Barack Obama was seeking re-election, and federal taxes consumed 15.3 percent of GDP. But by 2016, they had climbed to 17.8 percent. This year, according to OMB, they will hit 18.1 percent.

Is that a good deal for America?

Fifty-five years ago, when taxes were less than half what they are now per capita and consumed a smaller share of the economy, President Kennedy, a Democrat, believed Americans deserved a better deal.

In 1961, the economy grew at 2.6 percent — the same as it did in 2016. But Kennedy did not think that was good enough. He wanted more growth. He believed lower taxes was the path to it.

“The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system,” Kennedy said in a Dec. 14, 1962 speech to the Economic Club of New York.

“I am not talking about a ‘quickie’ or a temporary tax cut, which would be more appropriate if a recession were imminent,” Kennedy said. “Nor am I talking about giving the economy a mere shot in the arm, to ease some temporary complaint.”

The then-current tax system, he said, “siphons out of the private economy too large a share of personal and business purchasing power” and “reduces the financial incentives for personal effort, investment and risk taking.”

“In short,” Kennedy said, “to increase demand and lift the economy, the federal government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures.”

“For all these reasons,” he said, “next year’s tax bill should reduce personal as well as corporate income taxes, for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital.”

Kennedy’s vision for the tax code did not aim at taxing the rich so the federal government could redistribute wealth to the poor. It was about keeping America great — rather than putting us in a position from which we would need to make her great again.

“There is no need for us to be satisfied with a rate of growth that keeps good men out of work and good capacity out of use,” Kennedy said.

“America’s rise to world leadership in the century since the Civil War has reflected more than anything else our unprecedented economic growth,” he said.

The year Kennedy gave this speech, growth in real GDP rebounded to 6.1 percent. The last time America saw growth at that level or better was 1984, when Ronald Reagan was president, and it grew by 7.3 percent.

We have now seen an unprecedented 11 straight years in which the economy has not grown by even 3 percent.

The federal tax burden is greater per worker, of course, than it is per capita. Back in 1965, federal tax revenues equaled about $12,524 (in 2016 dollars) for each of the approximately 71,025,000 who had a job that June. In 2016, the $3,267,961,000,000 the federal government collected in taxes equaled approximately $21,629 for each of the approximately 151,090,000 who had a job in June.

Is $21,629 too little — or too much — for the federal government to collect in taxes per each working person in this nation?

America has too much government and too much taxation. We need to cut them both.

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