U.S. tax burden at lowest level since '58

Americans are paying the smallest share of their income for taxes since 1958, a reflection of tax cuts and a weak economy, a USA TODAY analysis finds.

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  By Karen Bleier, AFP/Getty Images
  A statue of Alexander Hamilton, the first secretary of the Treasury, in front of the U.S. Treasury building in Washington, D.C.

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By Karen Bleier, AFP/Getty Images

A statue of Alexander Hamilton, the first secretary of the Treasury, in front of the U.S. Treasury building in Washington, D.C.

The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data.

By contrast, individuals spent roughly 27% of income on taxes in the 1970s, 1980s and the 1990s — a rate that would mean $500 billion of extra taxes annually today, one-third of the estimated $1.5 trillion federal deficit this year.

The analysis comes as President Obama and Congress debate whether to cut federal spending, raise taxes or both.

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The latest dip in the tax burden came from a Social Security tax cut included in a December budget deal between Democrats and Republicans. It will reduce taxes $100 billion this year.

"We have a 1950s level of taxation and a 21st-century-sized government," says Robert Bixby, executive director of the Concord Coalition, a deficit-reduction advocacy group.

The fall in taxes is almost entirely caused by a weak economy rather than lower rates, says Curtis Dubay of the conservative Heritage Foundation. "It's easy to draw the wrong conclusion," he says.

Federal, state and local government spending hit a $5.6 trillion annual rate in the first quarter. That's the highest ever but, as a share of the economy, slightly below last year.

USA TODAY examined the full range of taxes that individuals pay to all levels of government. That includes income taxes for Medicare, property taxes for schools and gas taxes for roads.

At the national average, a person with an income of $100,000 would pay $23,600 in taxes today vs. $28,700 in 2000 and $27,300 in 1990.

The recession of 2001 and tax cuts championed by President Bush started a decade-long trend of taxing less income. The 2007-09 recession and new tax cuts in Obama's stimulus effort accelerated the change.

The one-year Social Security tax cut reduces the worker's rate from 6.2% to 4.2% — or $2,000 a year on a $100,000 income.

That has boosted the economy short-term, says Chris Christopher, an economist at the IHS consulting firm. "It's helping absorb the cost of higher gas and food prices," he says.

Other findings:

•Taxes per person. Individuals paid taxes at an annual rate of $10,549 per person in the first quarter — about the same as individuals have paid since 1990 when adjusted for inflation. Incomes have grown; tax payments haven't.

•Spending per person. Government spent at an annual rate of $18,086 per person in the first quarter. That's up from $13,552 in 2001, adjusted for inflation. The difference between individual taxes and spending comes from corporate taxes, user fees and borrowing.