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Federal tax receipts lowest share of GDP since 1950

October 20, 2009

What happened to federal receipts when incomes got clobbered in the recession:

Source: TaxVox

TaxVox's Bob Williams discusses projected revenues going forward and sees darkness:

Whether we’re above or below our 50-year average has no evaluative importance. What does matter, however, is that all three revenue paths fall far short of the 23.6 percent of GDP that CBO projects the government will spend in 2019. Maybe Congress and the president—and his successors—will manage to cut one-fifth of projected expenditures over the coming decade and balance the federal budget, but that’s a very tall order in the face of baby boomer retirements and soaring health costs. Reaching fiscal balance will take some combination of spending cuts and tax increases.

Spending cuts sure don't seem to be on the agenda, which means big honking tax increases loom. All the more reason taxpayers will take a hard look at the Roth IRA conversion opportunity available in 2010.