Just a quick tease here. I was doing some research for a piece I’m planning to write for RightWisconsin, and I decided to compare taxes collected versus wages over the last 30 years. This little series of nuggets ought to be worth a mention in a whole host of pieces. Before I unleash, I ought to mention my sources: the Bureau of Labor Statistics for wage data (specifically, the average weekly earnings for production and nonsupervisory employees in the private sector) and the Organization for Economic Co-operation and Development for taxes (all major taxes levied at every level).
– In 1985, the average weekly wage was $304.62, and the total tax take was $1,069,914 million (or a shade over $1 trillion).
– By 1995, the average weekly wage rose to $400.04, while the total tax take rose to $2,028,327 million.
– By 2007, just before the start of the Great Recession, the average weekly wage rose to $589.18, while the total tax take rose to $3,867,405 million.
– In 2009, the year the Great Recession officially ended (though only for government types and Wall Street), the average weekly wage rose again to $615.96, while the total tax take actually fell to $3,318,696 million.
– In 2015 (the last year OECD data is available), the average weekly wage only rose to $709.13, while the total tax take spiked to $4,754,120 million.
And yet some people wonder why there aren’t too many stay-at-home parents anymore, why the “recovery” feels like anything but, and why we can’t (re-)double the transportation taxes in Wisconsin.
Revisions/extensions (10:44 pm 1/6/2017) – So you want to consider GDP? Okay; let’s do that. In fact, I’ll give you the advantage of considering the private-sector portion; not only is it the portion that funds government, but its growth is greater than the government portion. Direct from the Bureau of Economic Analysis:
– In 1985, private-sector GDP was $3,438.3 billion (or if you prefer, just over $3.4 trillion).
– In 1995, private-sector GDP was $6,211.9 billion.
– In 2007, private-sector GDP was $11,675.7 billion.
– In 2009, private-sector GDP was $11,329.6 billion.
– In 2015, private-sector GDP was $14,818.3 billion.
In short, both between 1985 and 2015, and since the Great Recession “ended” (and especially since the Great Recession “ended”), growth in tax collections outstripped even private-sector GDP. The “why” is a subject of yet another post, but it starts with “Huge” and ends with “Government Growth” (and not the portion that adds to GDP either).
R&E part 2 (10:47 pm 1/6/2017) – Read the wrong line for everything except 1985 private-sector GDP on the spreadsheet. Corrected.