{"id":30,"date":"2025-05-01T13:46:44","date_gmt":"2025-05-01T17:46:44","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=30"},"modified":"2025-05-23T09:44:09","modified_gmt":"2025-05-23T13:44:09","slug":"deficits-debt-and-the-taxpayer-base-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/deficits-debt-and-the-taxpayer-base-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Deficits, Debt, and the Taxpayer Base \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><em>Originally written on 8\/6\/2022<\/em><\/p>\n<p><span data-contrast=\"auto\">Recently, Congress passed, and the President signed the Inflation Reduction Act, a tweak to the Federal government\u2019s taxing and spending policy. The Inflation Reduction Act is a significantly scaled-back version of a more ambitious Build Back Better fiscal plan.\u00a0\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The bill that passed is estimated to reduce the Federal government deficit over the next ten years but by a relatively small $264.1 billion. We suspect Congress will discuss tax policy and ways to raise government revenues again this decade.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Using 2019 tax data, the most recent year where comprehensive data is available, the federal government raised about $3.46 trillion in revenue and spent about $4.4 trillion. The sources of the revenue were $1.7 trillion (49%) from individual income taxes, $1.2 trillion (35%) from Social Security and Medicare taxes, $230.2 billion (7%) from Corporate Income Taxes, and $98.9 billion (3%) in excise taxes. The remaining 5% comes mainly from revenue from the Federal Reserve Bank, Customs Duties, Unemployment Insurance taxes, and Estate and Gift Taxes.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">If we take Social Security and Medicare taxes out of the equation, our back-of-the-envelope calculations suggest the Federal Individual Income Tax will account for around 75% of all Federal revenue exclusive of Social Security and Medicare taxes, even with the new increases in Corporate Income Tax. <\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Some suggest that only the \u201crich\u201d should pay the increased tax revenue since they are not paying their \u201cfair share.\u201d Of course, what is a \u201cfair share\u201d is a matter of opinion. Should the rich pay a higher proportion of their income than the poor? And if so, how much more? Twice, three times, ten times? We can\u2019t answer that question, but here is the 2019 data.\u00a0\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The richest 1% with adjusted gross incomes of more than $546,434 surrendered an average of 25.6% of their income to federal income taxes. The next richest 9% (adjusted gross incomes above $154,589 but below $546,434) surrendered 15.7%, while those in the bottom 50% (adjusted gross incomes of $44,269 or less) surrendered less than 3.5% to the taxman. The wealthiest 1% of taxpayers paid more than seven times what the taxpayer in the bottom half paid as a percentage of their income.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Suppose Congress were to reduce deficits and ballooning national debt in the next few decades without any spending cuts. The individual income tax will have to be increased. And it is hard to imagine how the necessary revenue can come exclusively from the top 1%.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Originally written on 8\/6\/2022 Recently, Congress passed, and the President signed the Inflation Reduction Act, a tweak to the Federal government\u2019s taxing and spending policy. The Inflation Reduction Act is a significantly scaled-back version of a more ambitious Build Back Better fiscal plan.\u00a0\u00a0\u00a0 The bill that passed is estimated to reduce the Federal government deficit [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[244],"tags":[263,251,245,255,258,260,256,252,257,261,249,254,247,250,194,265,246,79,264,248,253,262,259],"class_list":["post-30","post","type-post","status-publish","format-standard","hentry","category-tax","tag-adjusted-gross-income","tag-build-back-better","tag-congress","tag-corporate-income-tax","tag-customs-duties","tag-estate-tax","tag-excise-tax","tag-federal-government-deficit","tag-federal-reserve-bank","tag-gift-tax","tag-government-spending","tag-income-tax","tag-inflation-reduction-act","tag-ira","tag-medicare","tag-national-debt","tag-president","tag-social-security","tag-spending-cut","tag-tax","tag-tax-policy","tag-taxpayer","tag-unemployment-insurance-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Deficits, Debt, and the Taxpayer Base \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/01\/deficits-debt-and-the-taxpayer-base-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Deficits, Debt, and the Taxpayer Base \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"Originally written on 8\/6\/2022 Recently, Congress passed, and the President signed the Inflation Reduction Act, a tweak to the Federal government\u2019s taxing and spending policy. 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