Tax day realities

From Practical Economics

A look at historical trends offers some answers to the question of how much taxation is
sufficient for government to accomplish its necessary functions efficiently. Research has shown
that for America’s first 130 years, federal spending as a percentage of GDP averaged around 2.5%.
Since 1915, or for the next 75 years, spending consistently rose as a percentage of GDP and
averaged around 16.6%. Current spending is approximately 19% of GDP. The historical shift
above traditional norms in government spending and the associated increase in involvement in the
economy came during the Depression under Franklin D. Roosevelt’s administration prior to the
outbreak of WWII. This time frame forever changed the political landscape and philosophical basis
for expanding government’s involvement in the economy that continues to this day.

Year Government spending as a percentage of GDP

1787-1849 1.7%* (63 year period)
1850-1900 3.1%* (51 year period)
1901 2.5%
1905 2.1%
1910 2.2%
1915 2.0%
1920 7.3%
1925 3.3%
1930 3.4%
1932 6.9%
1933 8.0%
1934 10.7%
1935 9.2%
1939 10.3%
1941 12.0%
1944 43.6%
1945 41.5%
1947 14.8%
1948 11.6%
1950 15.6%
1955 17.3%
1960 17.8%
1965 17.2%
1967 19.6%
1970 19.3%
1975 21.3%
1980 21.7%
1985 22.9%
1990 21.8%
1995 20.7%
2000 18.4%
2003 19.9%
2008 21.0%
2009 28-31% estimated
2050 38% estimated
2075 40% estimated

* Total combined federal spending as a % of total combined GDP
Sources:
Historical Tables. “Budget of the United States Government.” fiscal year 2006.
Johnson, Louis D. “Source note for US GDP, 1790-Present.” Economic History Services (1997)
Congressional Budget Office, Long range fiscal policy brief, July 3, 2002