Many Americans believe that taxes have been gobbling up an ever-increasing share of the U.S. economy. Is this observation correct? Explain

Answer 1

Available data suggests that the share of federal taxes in GDP was rather steady from the early 1950s until around 2000 . It climbed from less than 4 percent in 1929 to 20 percent during World War II, fell back to 15 percent in the immediate postwar period, and fluctuated mainly in the 18 to 21 percent range until the Bush tax cuts pushed it down below 17 percent. More recently, it declined to 16 percent as a result of the 2007-2009 recession. The share of GDP taken by state and local taxes climbed substantially from World War II until the early 1970s. But since then it, too, has remained remarkably stable?at about 10 to 11 percent. The shares of GDP taken in taxes by the federal, state, and local governments have been approximately constant for about 40 years.