The annual rate of increase in U.S. federal government receipts picked up to 9.5% in Q3 2005, compared to 5.6% in 2004 and a negative -0.8% over the first four years of the Bush administration. (See Federal Flow of Funds Table F106).

During the last four years of the Clinton administration, receipts of the federal government increased, on average, 7.7% per year, which was faster than the reported rate of inflation.

The three main components of federal income are personal taxes, contributions for government social insurance, and taxes on corporate income. In Q3 2005, the percentage distribution of these three items was about the same as in 1995.

The graph shows an interesting pattern in the percentage distribution of federal receipts over the last decade:

1. During the Clinton administration, the contribution of corporate taxes, relative to taxes paid by individuals, declined. This is consistent with the secular trend towards reduction of corporate taxes which has been in progress for over half a century. (See: Profits and Population.)
2. During the early years of the Bush administration, due to the economic recession, the percentage of corporate taxes to government income continued to fall. However, from 2003 onwards, this percentage has increased to the level of 1995.

The fact that, in a relative sense, a Republican administration has been more aggressive in taxing corporations that the Democratic administration of President Clinton is not generally reported in the American media.

This entry was posted on Sunday, February 12th, 2006 at 5:27 pm and is filed under Treasuries, Open Market, Government Officials. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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