Four tax facts for Congress deficit super panel

Reuters News
Posted: Sep 22, 2011 11:14 AM
Four tax facts for Congress deficit super panel

WASHINGTON (Reuters) - The chief tax researcher of Congress gave a "super committee" on deficit reduction a broad look on Thursday at the condition of the tax system.

Here are some of the facts presented by Thomas Barthold, chief of staff of the nonpartisan Joint Committee on Taxation to members of the Joint Select Committee on Deficit Reduction:

* The individual income tax is the largest source of federal revenue, accounting for 47.1 percent; Social Security and Medicare payroll taxes account for 35.3 percent; corporate taxes, 8.3 percent; excise taxes, 3.1 percent.

* Corporate and excise taxes have declined as a percentage of federal revenues from 1950 to 2010. Social insurance taxes (for Social Security and Medicare) have risen to their present level of about 35 percent from around 10 percent in the 1950s. The percentage of federal revenue derived from the individual income tax has stayed largely constant at 40 to 45 percent.

* Compared to the size of the economy, federal tax revenues are very low. In 2010, they were 14.9 percent of gross domestic product. That was the lowest level since 1950 because of the recession and tax cuts legislated in 2009.

* Tax expenditures are breaks that cut taxes for selected groups. On individual taxes, the largest expenditure is the exclusion for employer-provided healthcare, followed by the deduction for mortgage interest; reduced tax on dividends and capital gains; exclusion of defined contribution pension plan contributions and earnings; earned income credit; deduction for state and local taxes; exclusion of defined benefit pension plan contributions and earnings; exclusion for capital gains at death; and deduction for charitable donations.

(Reporting by Kevin Drawbaugh, Editing by Chizu Nomiyama)