No. 981 I The Heritage Foundation 214 Massachusetts Avenue N.E Washington, D.C. 20002-4999 (202) 546-4400 The Thomas A. Roe Institute for Economic Policy Studies March7,lW REDUCINGTHECRUSHINGTAXBURDEN ON INTRODUCTION L The federal govemqent ba+put ~mericai's f&es under financial siege. Middle-in come as well as blue-w\\hr,fiii$ies'are fhding'it hard to buy a first home or pay for their children's college Ftion. To\\ a\\l&gedegree, this is because of an explosive rise in the burden of federal -0 m In 1950, the average Ameni,family with children paid only 2 percent of its income to the federal governmentin tax Today that same family pays 24.5 percent m The averagerfdy,\\now loses $10.060 per year of its income due to the increase in F5 federal taxes,as(a-share of family income. This tax loss exceeds the annual cost of the average home,mortgage.
A are included the government now takes 37.6 percent of are not aware that they are really working to support Uncle raise their famiy''s standard of living. Among marrieci-couple families the husband and wife are employed, two-thirds of the wie''s earnings go family with children federal taxes; only one-third goes to supporting the family 1 2 These figures include federal income and Social Security taxes.
This figure includes federal income tax. Social Sdty taxes, fedaal indirect taxes, and state and local taxes. The author wishes to thank Chris Edwards of theTax Foundation for providing this infonnation Note: Nothing written here is to be construed as necessarily reflecting the views of The Heritage Foundation or as an attempt to aid or hinder the passage of any bill before Congress.
A If federal taxes as a share of family income were restored to the 1950 levels, the aver age employed mother in a two-parent family could leave the labor force entirely and the family would see only a modest drop in post-tax income, compared with the fam iy''s post-tax income under tody''s tax rates.
During the past four decades, the federal income tax burden on a family of four has in creased by over 300 percent as a share of family income. Single Americans and married couples with no children have escaped most of this tax increase.
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