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US government finances (and the US economy):  Maybe I’m slow, but I just can’t get an accurate fix on what’s fact or fiction. Everything I read on the web, or hear from our so well informed media, seems to conflict or is agenda-driven, ill-informed or even just plain wrong. And, God forbid, I try my best to pay zero attention to anything emanating from a politician..!

I’ve reached the point where I really need a bit of a sanity check on all this. Why am I focusing on the US government (and economy)? Well, it’s the largest global economy by far, and it affects every one of us around the world in our daily lives (as the financial crisis illustrated in such a ghastly manner) – whither America goes, the rest of the world follows…

I’ll (mostly) try to stick to the facts – hopefully, dear reader, you’ll find that a tad refreshing… Also, note all facts/figures are in relation to the federal government, not state or local, unless otherwise highlighted:

– First, we need to start with US GDP, which was $14.6 trillion in 2010, for a No. 1 country ranking and a 23% share of world GDP

– In terms of economic regions, the EU is No. 1 with a $16.2 trillion GDP in 2010, and a 26% share of world GDP. The Euro Area is smaller than the US, with a $12.2 trillion and a 19% share

– By comparison, here are some other country GDPs & rankings (Top 5, plus some other assorted picks of mine):

Ranking Country GDP % of World GDP
2 China $5.9 T 9%
3 Japan $5.5 T 9%
4 Germany $3.3 T 5%
5 France $2.6 T 4.1%
6 UK $2.2 T 3.6%
11 Russia $1.5 T 2.3%
12 Spain $1.4 T 2.2%
14 South Korea $1.0 T 1.6%
26 Saudi Arabia $376 B 0.6%
29 Iran $331 B 0.5%
32 Greece $305 B 0.5%
42 Ireland $204 B 0.3%
45 Nigeria $194 B 0.3%
53 Ukraine $138 B 0.2%
56 Vietnam $104 B 0.2%

– Next, let’s look at government revenues (more commonly known as taxes!), which were $2.2 trillion, or 14.9% of GDP, in 2010

– Pre-2007, taxes averaged about 17% of GDP in the 2000s

– The financial crisis, and subsequent recession, have obviously impacted but 2010 taxes are at the lowest % of GDP (tied with 2009) since 1950

– On a global basis: Federal, state & local taxes were 23% (or possibly up to 26%) of GDP in 2009, almost the lowest among the largest (34) industrialized nations

– 2010 revenues are composed of:

Tax Amount ($B) % of Revenues
Individual Income Tax 899 42%
Social Insurance Contributions 865 40%
Gas/Vice/Customs/Estate etc. Tax 208 10%
Corporate Income Tax 191 9%

– Some people like to refer to these in terms of GDP instead:

Tax Amount ($B) % of GDP
Individual Income Tax 899 6.2%
Social Insurance Contributions 865 5.9%
Gas/Vice/Customs/Estate etc. Tax 208 1.4%
Corporate Income Tax 191 1.3%

– Due to exemptions/deductions/credits etc. (and sheer poverty, of course) almost 50% of US households actually pay no federal income tax

– In the 1980s, individual income taxes were 8.5% of GDP. Now they’re at 6.2% of GDP, the lowest level since the 1950s

– US businesses regularly highlight the 35% federal tax rate as one of the highest tax rates globally among advanced economies

– Inc. state & local taxes, the US has just taken over from Japan as having the highest corporate tax rate of 39.2% in the developed world

– In fact, US corporate taxes (inc. state & local) are among the lowest as a % of GDP in the industrialized world

– Corporate taxes were 4.8% of GDP in the 1950s, 3.8% in the 1960s, 1.9% in the early 2000s, and only 1.3% of GDP in 2010

To be continued…