The federal government is on track to collect more than $3.6 trillion in revenue for the current fiscal year, roughly 18.9 percent of of the nations $19.3 trillion economy.
And still, it will not be enough to keep the government in the black.
Washington definitely has a spending problem, not a revenue problem.
By fiscal year 2021, according to projections by the Office of Management and Budget, revenues will hit 20 percent of gross domestic product (GDP), a figure reached just once since World War II. The fact revenues are near historic highs is important to keep in mind as the debate over tax reform gets ready to kick off in earnest over the next few weeks, according to conservative budget experts.
Washington definitely has a spending problem, not a revenue problem, said Adam Michel, a policy analyst at the Heritage Foundation. Were spending our money on too many things.
Tax Revenue as Share of GDP
Source: Office of Management and Budget
This Week host George Stephanopoulos on Sunday offered a preview of what will come when he grilled House Freedom Caucus Chairman Mark Meadows (R-N.C.) about whether Congress needs to cut a dollar of spending for every dollar of tax cuts.
Does it have to be fully offset? My personal response is no, Meadowssaid.
That prompted surprise from Stephanopoulos.
Oh, well that seems like a bit of a shift, he said.
Meadows argued lower taxes would stimulate economic growth, increasing wages and tax revenue. Stephanopoulos surprise notwithstanding, that has been standard Republican philosophy since the days of President Ronald Reagan. The GOP should not run away from it now, said Grover Norquist, president of Americans for Tax Reform.
We had similar complaints when Reagan took the marginal tax rates down, he told LifeZette.
Norquist said the economy averaged about 2 percent economic growth under former President Barack Obama. Boosting that to 3 percent would produce an additional $2.5 trillion over a decade, he said. He said a 4 percent growth rate, achieved in the Reagan and Clinton administrations, would mean $5 trillion.
The way to raise revenue is economic growth, he said. The Ds have it all wrong. They want to keep spending money and have lousy economic growth. We tried that for eight years.
A 2013 study by economists Karel Mertens and Morten Ravn found a 1 percentage point cut in the average personal income tax rate raises economic growth per capita by 1.4 percent in the first quarter and 1.8 percent after three-quarters. An equivalent cut in the corporate income tax rate raises GDP by .4 percent in the first quarter and .6 percent after a year.
Norquist argued that not all tax cuts are equal, though. He said President George W. Bushs 2001 tax cut was mainly through tax credits, which have a limited impact on GDP. He urged Congress to pass growth tax cuts that would be longer-lasting.
Michel, of the Heritage Foundation, noted that federal revenues as a share of GDP have held fairly stable within a few percentage points for decades, despite changes in tax rates.
The inability to sort of move beyond that speaks to how difficult it is to squeeze more money out of the tax code by raising rates, he said.
Michel said tackling deficits and the national debt over the long haul depends on spending reform. He said that means taking on the big-ticket items like Social Security and health care spending.
There are definitely reforms that can be done in these areas where we can contain costs, and I think we need to look at these areas, he said.
Norquist said cutting taxes also could help reduce spending if it juices the economy and reduces government dependency.
Growth, growth, growth is the way to reduce spending because you spend less on welfare, he said.
Although some experts contend that tax reform is even harder than the health care overhaul that failed last week, Norquist argued that it is easier. The people hurt by the failure to repeal Obamacare are diffuse, he said. The people hurt by taxes, he added, are well-known, and they know who they are. And they know who to be made at.
Read more:
GOP Targets Taxes as Government Nears 20 Percent of Economy - LifeZette
- Fiscal Year 2013 Budget | Budget.House.Gov [Last Updated On: June 16th, 2016] [Originally Added On: June 16th, 2016]
- Fiscal Freedom: How Tax Burden Affects Economic Freedom [Last Updated On: June 16th, 2016] [Originally Added On: June 16th, 2016]
- Fiscal Year 2013 Budget | Budget.House.Gov [Last Updated On: June 17th, 2016] [Originally Added On: June 17th, 2016]
- Fiscal Cricket Figuring out this financial freedom thing. [Last Updated On: June 27th, 2016] [Originally Added On: June 27th, 2016]
- Latinos For Tennessee | Faith, Family, Freedom, and Fiscal ... [Last Updated On: July 25th, 2016] [Originally Added On: July 25th, 2016]
- Economic Freedom of the World - Peer-reviewed papers ... [Last Updated On: July 27th, 2016] [Originally Added On: July 27th, 2016]
- Index of Economic Freedom - The Heritage Foundation [Last Updated On: July 27th, 2016] [Originally Added On: July 27th, 2016]
- Freedom in the 50 States 2013 | Overall Freedom | Mercatus ... [Last Updated On: August 16th, 2016] [Originally Added On: August 16th, 2016]
- Greece Economy: Population, Facts, GDP, Unemployment ... [Last Updated On: August 23rd, 2016] [Originally Added On: August 23rd, 2016]
- Freedom in the 50 States 2015-2016 | Overall Freedom ... [Last Updated On: August 25th, 2016] [Originally Added On: August 25th, 2016]
- DoD Releases 2015 Fiscal Year Freedom of Navigation Report [Last Updated On: August 30th, 2016] [Originally Added On: August 30th, 2016]
- Economic Freedom: The Concise Encyclopedia of Economics ... [Last Updated On: October 13th, 2016] [Originally Added On: October 13th, 2016]
- Freedom in the 50 States 2015-2016 | Texas Fiscal Freedom ... [Last Updated On: November 14th, 2016] [Originally Added On: November 14th, 2016]
- Freedom in the 50 States 2015-2016 | Fiscal Freedom | Cato ... [Last Updated On: November 16th, 2016] [Originally Added On: November 16th, 2016]
- Slovakia (Slovak Republic) Fiscal Freedom | Economic ... [Last Updated On: November 19th, 2016] [Originally Added On: November 19th, 2016]
- Fiscal year - Wikipedia [Last Updated On: November 23rd, 2016] [Originally Added On: November 23rd, 2016]
- Patriots For Economic Freedom [Last Updated On: December 7th, 2016] [Originally Added On: December 7th, 2016]
- To see how a bill becomes law, follow the money - News Sentinel [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Economy to grow more than 7 per cent next fiscal: Shaktikanta Das - The Indian Express [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Making the case for an RBI rate cut - Livemint [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Cotton Calls for a $26B Uptick in Planned Defense Supplemental - USNI News [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Most refugees who enter the US as religious minorities are Christians - Pew Research Center [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Making A FOIA Request Is About To Get Tougher At FBI - Daily Caller [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Guest Article: Capitulation before the First Shots Are Fired - Somewhat Reasonable - Heartland Institute (blog) [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Just Energy Reports Third Quarter Fiscal 2017 Results - GlobeNewswire (press release) [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Greece and the Folly of Trying to Solve an Overspending Problem with Tax Increases - People's Pundit Daily [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Historic audit of illegitimate debts - Inquirer.net [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Key conservative open to insurer payments during ObamaCare transition - The Hill [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- A closer look at the appeals-court panel's travel-ban ruling - The Seattle Times [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- The United Kingdom and the Benefits of Spending Restraint - Cato Institute (blog) [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- MEL STA. MARIA | The 1987 Freedom Constitution should not be changed - InterAksyon [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- The United Kingdom and the Benefits of Spending Restraint - People's Pundit Daily [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Promoting fiscal discipline - Daily Excelsior [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Van Zandt leadership changes - Altoona Mirror [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Meet The Venezuelan-Born Mom Who Ran For State Senate To Stop Socialism - The Federalist [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Local officials get primer on cuts in Medicaid - Marietta Times [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- What the papers say: Britain's soaring EU budget bill shows Brexit can't happen soon enough - Spectator.co.uk (blog) [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- The GOP's Big Tax Dilemma: Repealing Obamacare Taxes - The Fiscal Times [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- GOP defense hawks barely squawked on Mulvaney nomination - Washington Examiner [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Some GOP lawmakers want entitlement reform in next budget - The Hill [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Are Republicans Losing Momentum on Obamacare Repeal? - The Fiscal Times [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Mason Fiscal give WVFD go-ahead - Ledger Independent [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Better Buy: Baidu Inc. vs. Amazon.com Inc. -- The Motley Fool - Motley Fool [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Mason Fiscal gives WVFD go-ahead - Ledger Independent [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Officials Continue to Dodge Attempts to Disclose Use of Stingrays - Reason (blog) [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- 10 Things to Know About Stephen Feinberg, Trump's Potential Intelligence Czar - The Fiscal Times [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Rand Paul Joins Freedom Caucus to Kick Off Conservative Obamacare Replacement Drive - Breitbart News [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Scott Pruitt: 5 Fast Facts You need to Know - Heavy.com [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Senate Confirms Fiscal Hawk Mick Mulvaney As Trump's Budget Director - New York Magazine [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- EDITORIAL: The United States continues to drop on the Heritage Foundation's index of economic freedom - Las Vegas Review-Journal [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Freedom seems to be missing from president's vocabulary - Detroit Free Press [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Liberia Ahead Of Ukraine In Index of Economic Freedom 2017 - Global News Network [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- US Economic Freedom Hits Historic Low - theTrumpet.com [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Pols & Politics: Battle brews on extending T's Pacheco Law waiver - Boston Herald [Last Updated On: February 19th, 2017] [Originally Added On: February 19th, 2017]
- Sounds of freedom rattling to far reaches of area - News - The Daily ... - Jacksonville Daily News [Last Updated On: February 19th, 2017] [Originally Added On: February 19th, 2017]
- Sri Lanka's govt. integrity, economic freedom deteriorate - Daily Mirror [Last Updated On: February 20th, 2017] [Originally Added On: February 20th, 2017]
- Oklahoma bill could strip city LGBT protections not outlined by the state - KOKI FOX 23 [Last Updated On: February 20th, 2017] [Originally Added On: February 20th, 2017]
- PH up by 12 notches in Economic Freedom Index 2017 ranking | SunStar - Sun.Star [Last Updated On: February 20th, 2017] [Originally Added On: February 20th, 2017]
- Why is a freedom enshrined in the UN declaration of human rights ... - Stabroek News [Last Updated On: February 22nd, 2017] [Originally Added On: February 22nd, 2017]
- Ohanaeze president worried about maltreatment of pro-Biafran members worries - Guardian [Last Updated On: February 22nd, 2017] [Originally Added On: February 22nd, 2017]
- PH leaps in economic freedom; 'yes' to calls for lasting peace - Manila Bulletin [Last Updated On: February 23rd, 2017] [Originally Added On: February 23rd, 2017]
- Alaska's income tax proposal, the Senate, and 2018 - State of Reform [Last Updated On: February 23rd, 2017] [Originally Added On: February 23rd, 2017]
- Ohanaeze Ndigbo decries violence against MASSOB, IPOB - Vanguard [Last Updated On: February 23rd, 2017] [Originally Added On: February 23rd, 2017]
- The US Navy Sends a Powerful Message to Beijing in the South China Sea - The Fiscal Times [Last Updated On: February 23rd, 2017] [Originally Added On: February 23rd, 2017]
- JCPenney to close 13 to 14 percent of stores - Rome Sentinel [Last Updated On: February 24th, 2017] [Originally Added On: February 24th, 2017]
- Solution created for county builders - Morehead News [Last Updated On: February 24th, 2017] [Originally Added On: February 24th, 2017]
- Dj vu all over again - The Capitol Fax Blog (blog) [Last Updated On: February 24th, 2017] [Originally Added On: February 24th, 2017]
- Trump's Volatility, Protectionism Makes Him a Poor Bet for Investors - Newsweek [Last Updated On: February 25th, 2017] [Originally Added On: February 25th, 2017]
- Expect the unexpected with upcoming budget, appropriations cycle, experts say - FederalNewsRadio.com [Last Updated On: February 25th, 2017] [Originally Added On: February 25th, 2017]
- Publishers: Cuomo proposal removes transparency - Oneonta Daily Star [Last Updated On: February 26th, 2017] [Originally Added On: February 26th, 2017]
- Pleading poverty, demanding new taxes - Washington Times [Last Updated On: February 26th, 2017] [Originally Added On: February 26th, 2017]
- Philippines Improves in Economic Freedom ranking - CFO innovation ASIA [Last Updated On: February 26th, 2017] [Originally Added On: February 26th, 2017]
- What Gives with Sprint's Declining Customer Unit? - Market Realist [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- California lawmakers press ICE for information about raids - The Mercury News [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- Economic Freedom - HATICE KARAHAN - Yeni afak - Yeni afak English [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- Digging out from under records requests - GCN.com [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- California 'Trust Women' License Plates to Help Pay for Reproductive Care in Trump Era - Rewire [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- Reader Viewpoint: Recognizing our imperfections, tribulations allows us to be wise - The Herald Bulletin [Last Updated On: March 1st, 2017] [Originally Added On: March 1st, 2017]
- The Staggering Costs of Operating Air Force One - The Fiscal Times [Last Updated On: March 1st, 2017] [Originally Added On: March 1st, 2017]
- Pakistan ranked ahead India in Economic Freedom Index report ... - ARY NEWS [Last Updated On: March 1st, 2017] [Originally Added On: March 1st, 2017]