Greg Mankiw asks the following question:
How does the tax burden the middle class faces today compare with the tax burden the middle class has faced historically?
His source defines history as dating back to 1979 and concludes that the tax burden on the middle class was lower in 2005 versus 1979. If you take his invitation and check out the data yourself, you’ll see that every quintile enjoyed a reduction in the tax burden. But I have two problems with this starting with what Greg noted:
This includes all federal taxes, not just income taxes.
Fine but that excludes the tax burdens imposed by state and local governments. More importantly, the share of GDP captured by Federal spending hasn’t declined all that much. So what has changed? Oh yea – the reliance on Federal borrowing which has deferred the Federal tax bite but not reduced it.
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