To understand how tax policies in the U.S. ought to be changed, it is necessary to know how and why they have changed in the past. This report traces major trends in government revenue and spending priorities from 1950 to 1996.
Major findings include: Total tax burden is high and very progressive by historical standards; spending has shifted toward entitlements and away from constitutionally required services and services that benefit everyone equally; and several major trends in taxes and spending came to an end or reversed themselves in the early 1990s.
A national debate is taking place over how to reform the U.S. tax system. Proposals are on the table to replace the current federal income tax with a simpler “flat-rate” income tax or a national retail sales tax.
By studying the past, we can learn why the current tax and spending priorities were chosen (or spontaneously evolved) and decide whether those priorities are still (or were ever) valid. By learning the lessons of the past, we are more likely to arrive at consensus and wise decisions about how to change current tax policies.
