Individual income and payroll taxes cover over two-thirds of government spending.

In 2015, one-eighth of the government’s spending will be financed by deficits.

Where Does The

Federal

Government’s

Money Come

From?

Source: Congressional Budget Office, March 2015 budget projections.

Deficit$486

Individual Income$1,506

Payroll$1,056

Corporate Income

$328

Other$302

Billions

Income Tax Rates

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 $50k $100k $150k $200k $250k $300k $350k $400k $450k $500kGross Income

Marginal Rate

Average Rate

(Tax rates in 2014 for a married couple filing jointly)

Who Pays

Federal Taxes?

Source: Congressional Budget Office, “The Distribution of Household Income and Federal Taxes, 2011.”

Bottom 20%0.6% Second 20%

4%

Middle 20%9%

Fourth 20%18%

81st to 99th Percentiles

45%

Top 1%24%

The top 20% of households pay almost

70% of the nation’s taxes. The top 1% is responsible

for paying nearly a quarter.

(Percentage of all federal taxes paid, by household income)

10%

12%

14%

16%

18%

20%

22%

24%

26%

1990 1995 2000 2005 2010 2015 2020 2025

Revenues Don’t Cover Spending

Source: Congressional Budget Office, March 2015 budget projections.

Percent of the economy (GDP)

Actual Projected

20.2%SPENDINGAVERAGE

17.2%REVENUESAVERAGE

Deficit

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018

Tax Breaks Have Grown Over Time

Actual Projected

Source: U.S. Department of the Treasury, compiled by the National Priorities Project.

Inflation-adjusted dollars

Tax Reform Act of 1986

There is now twice as much money in “tax expenditures” – deductions, credits, and other tax breaks – as there was after Congress last overhauled the tax code in 1986.

Source: Congressional Budget Office, Joint Committee on Taxation

Tax Expenditures: Another Kind of Spending

Tax Expenditures aren’t part of the budget that Congress passes every year, but are

similar to government spending programs. Think

about it: $1,000 given out in Pell grants and $1,000 given out through education tax

credits will both give $1,000 to students.

If they were counted as a normal part of the budget, tax expenditures would be over a quarter of spending.

Tax Expenditures

26%

Social Security18%

Health Care19%

Defense13%

Non-Defense Discretionary

12%

Interest5%

Other, 7%

High Earners Benefit Most From Tax Expenditures

Most tax expenditures are regressive and

provide a bigger benefit to the wealthy. The top

20% receives 50% of the benefit from the largest

tax expenditures.

Percent of “major” tax expenditures received

0%

10%

20%

30%

40%

50%

60%

LowestQuintile

SecondQuintile

MiddleQuintile

FourthQuintile

HighestQuintile

Top 1%

Source: Congressional Budget Office, “The Distribution of Major Tax Expenditures in the Individual Income Tax System.”

Note: Graph shows ten “major” income tax expenditures as identified by Congressional Budget Office, which make up two-thirds of total tax expenditures by dollar amount.

Tax Expenditures Rival Spending Programs in Size

*Spending represented by HUD Budget. Source: Office of Management and Budget, President’s Budget FY 2016; Joint Committee on Taxation**Spending represented by Pell Grants. Source: Joint Committee on Taxation*** Refundable credits include EITC and Child Tax Credit. Spending includes SSI,TANF, and Foster Care Assistance. Source: HHS, SSA

$0

$20

$40

$60

$80

$100

$120

$140

Housing* Education** Income Support***

Tax Expenditures Program Spending

Billions, FY2014

U.S. Has World’s Highest Corporate Tax Rate, but Only Average Collection

The official U.S. corporate tax rate is the highest in the developed world, but the average rate paid after deductions and credits is more typical.

Source: U.S. Department of the Treasury, “The President’s Framework for Business Tax Reform.” Data from Fiscal Year 2011.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

United States UK Italy Canada Germany France

Mar

gina

l Cor

pora

te Ta

x Ra

te

Statutory RateEffective Rate

The Tax Reform Act of 2014 would have increased the size of the economy by between 0.1 percent and 1.6 percent by 2023.

Tax Reform Promotes Economic Growth

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

MEG Model, Low Change InEmployment

MEG Model, High Change InEmployment

OLG Model

Low Estimate High Estimate

Source: Joint Committee on Taxation

Where Tax Dollars Went In 2014Share of Each $100 Paid in Taxes

Social Security $24.11Health $23.72

Medicare $14.42Medicaid $8.60Other Health $0.69

Defense and Military Benefits $21.49Interest $6.54Civilian Federal Retirement $2.86Transportation $2.62Refundable Credits $2.45Food Stamps $2.18Education $1.84Supplemental Security Income $1.54Justice $1.44Housing Assistance $1.36Unemployment Insurance $1.26Natural Resource Protection $1.03Foreign Aid $1.00Agriculture $0.70Other $3.87

Total $100